Teddy Bridgewater and the Sunk Cost Fallacy

A brief note prior to the article: this is not an article that focuses on an opinion of whether or not the Saints should re-sign Teddy Bridgewater. Rather, the focus of the article is on finding the correct process to form our opinions on the subject.

When making decisions during the NFL offseason, it’s important for decision-makers to think rationally. That sounds simple enough, doesn’t it? Coaches, General Managers, and their staff are paid an incredible amount of money to make the best decisions possible for the future of their franchises. The least they can do is find rational reasons to justify their decisions. By calling ourselves fans, we inherently admit that we are, at least to some extent, biased when forming opinions. After all, “fan” is short for “fanatic”. Even so, most fans like to think of themselves as rational with well-formed opinions on their team’s offseason plans.

If you read any Saints offseason preview, one of the first two talking points will be about the Teddy Bridgewater situation. The Saints traded a 3rd Round pick for Bridgewater in August of 2018, and Bridgewater will become a free agent once the league year ends on at 11:59 pm on March 13th. These articles usually feature much nuance regarding Bridgewater’s situation: Drew Brees will be returning for (at least) one more shot at a Super Bowl so the Saints would be paying Bridgewater to be a backup for now. Additionally, should Bridgewater walk, the Saints could be in line for a compensation pick depending on the team’s other free agent signings. Most of these articles will give opinions and predictions on what should and will happen. However, almost every Saints fan and writer has fallen victim to thinking at least somewhat irrationally regarding how they believe the Saints should proceed, using the Sunk Cost Fallacy to form their opinion.

In Economics, a Sunk Cost is a cost that has already been incurred and cannot be recovered. For example, imagine you’ve purchased a non-refundable ticket to a crawfish cook-off with live music. Once you arrive at the cook-off, the money you spent on the ticket would be considered a “Sunk Cost.” The ticket is non-refundable, and the purchase is complete. Thus, that money spent should theoretically not affect any future decisions made. However, humans aren’t always rational. If the crawfish being served is in tiny proportions with long lines and isn’t tasty, and if the live music is less than entertaining, the rational choice would likely be to leave and do something more enjoyable. But that isn’t the only factor most people use when making that decision.

A person who spent $50 on a ticket would, in actuality, be far more likely to stick it out than someone who paid $5 because people irrationally think “if I leave, I would’ve spent $__ for nothing.” Instead of focusing on what’s best for them now, the person feels the need to justify the amount of money paid: the more paid, the more of a need to justify. In reality, that money is gone, and the decision to stay or go should be based off of whatever will bring the most value to a person at the current moment. People make decisions with this logic constantly: sitting through a bad movie because you bought a ticket, doubling down on losses when gambling, eating extra at a buffet to “get your money’s worth”, buying something from a store because “you drove all the way out there so you might as well get something”, etc.

With regards to Teddy Bridgewater, the third round pick the Saints traded to the Jets is a sunk cost: nothing the Saints do from this moment forward will change the fact that the third round pick is gone. That doesn’t stop many fans and national writers from using that sunk cost as a key point in this offseason for the Saints. I guarantee that if you’re reading this article, you have heard numerous people use an argument along the lines of “If the Saints don’t re-sign Bridgewater, they will have traded a 3rd Round Pick for nothing” or “If the Saints don’t re-sign Bridgewater, they need to make sure they receive a compensation pick; otherwise, that trade will have been a disaster.” And too many people, you can see the logic behind the claim: the optics of the trade can look pretty bad if the Saints let him walk, especially if the team doesn’t receive a compensation pick. But it’s also important to realize that that’s all it really is: optics. Whether or not the trade is viewed as good or bad in a couple of months won’t affect the Saints heading into next season and beyond. Something that would affect the team beyond this is making a bad decision for the purpose of justifying a trade that happened months ago.

The interesting dynamic with the Teddy Bridgewater situation is that you can make a legitimate and rational argument for re-signing him or letting him walk without using the Sunk Cost Fallacy. If the team believes Bridgewater can be the future QB beyond Brees, it could certainly be worth overpaying a backup QB for a year or two to guarantee having him on the team beyond. If the Saints instead believe the price isn’t worth paying a backup when they have Super Bowl aspirations next season, the team could find more value in the cap space leftover and a potential compensation pick.

The worst thing the Saints could do heading into the offseason is pigeon-hole themselves into a specific path with little-to-no flexibility because they feel the need to justify the price paid for Bridgewater last August. Even should Bridgewater sign elsewhere, limiting yourselves to a path where the team can receive a compensation pick so that they have something to show for the trade would be unwise. While that could very well be the best path in the end, limiting your options for an irrational reason will never be a wise process.

Altogether, the Saints’ final decision on Teddy Bridgewater could potentially decide the course of this franchise’s life after Brees. In doing so, the team and we as fans must recognize its importance and come to the decision (or opinions for fans) rationally.