The Tested Risk-Reward Formula for Bracket Success

To win your bracket pool, you need to consider the value upside and risk downside of each selection.

Developing an optimal strategy for a bracket pool requires balancing risk and value. To win a bracket pool, you must score some points that your opponents do not get. That’s the value part, where you are getting an edge on your pool in situations where your opponents may be under-picking a particular team relative to their chances.

Conversely, though, you must not miss out on too many points that your opponents do get if you hope to win. And therein comes the risk part of the evaluation. If you get too risky, you could be giving away points to your competition. Few things are more painful in a March Madness pool than sitting with no chance to get points because an upset you picked to happen did not advance while your competitors are about to add to their total in the standings.

You have a good chance to cash out if you do more of the former (gain points on the field) than the latter (take zero points when others are scoring). But how do you balance the two competing considerations of risk and value? This section will review some things we have learned over the years.

How to Determine “Value” Bracket Picks

First, let’s define what we mean by value. At a simple level, value represents the difference between what objective measures of probability say could happen and how your opponents (“the public”) pick outcomes. We use our internal predictive power ratings, make manual adjustments based on injuries and lineups, and monitor the betting markets. We also gather public pick information on how games are being selected to assess value.

Technically, any outcome where the public pick rate does not precisely match our game-advancement odds provides value on one side. If we project a No. 4 seed to have a 50% chance of reaching the Sweet 16, but the public is only picking them 35%, that team has value to make the Sweet 16.

Similarly, if a No. 16 seed has a 5% chance of winning against a No. 1 seed but is only being picked by 2% of the public, that No. 16 seed technically has value. But there are limits to when you want to rely on value over risk.

How to Think About Risk in Your Bracket

Risk, as we use it here, is the difference between the safest possible outcome you could select and the alternative you are considering. Each successive round becomes riskier overall as the tournament goes on, making it less likely that even the best teams advance. However, we are looking at the relative differences when we evaluate risk.

When evaluating whether to pick a first-round game, assessing risk is as simple as looking at the difference in win odds between the two teams. When assessing risk in deciding who to take to the Elite Eight, the risk assessment becomes the relative difference between the team you are considering and the team most likely to advance out of that section of the bracket.

Take 2017, when North Carolina was our most frequent national title recommendation. North Carolina was, in absolute terms, a risky pick, as we assessed them as having a 15% chance of winning the title. But you have to pick somebody to win the national title, and no other team had a better individual chance than those 15% odds. Thus, other teams’ title odds were compared with North Carolina’s 15% when evaluating the risk of who to pick. (With the public choosing the Tar Heels slightly less frequently than our odds put them to win, their risk and value profiles were favorable.)

Making Value Picks Is Not Enough

While value-based picking makes sense as a general strategy, that doesn’t mean you should pick every undervalued team in your NCAA bracket–far from it.

Let’s return to that No. 16 seed versus No. 1 seed example. If you only cared about value, maybe you picked the massive upset. But the relative risk of picking that upset is enormous. In most years and cases, you lose ground to nearly all of your opponents. The reward is small, and your opponents would still be positioned to get more points as the No. 1 seed advanced, hurting you even more in most pools.

If you make an unpopular pick that doesn’t play out, and a very popular pick ends up surviving in its place, then it’s bad news for your bracket. And because an NCAA bracket is a web of 67 interdependent decisions, you can’t consider each pick in a vacuum.

Why Value Only Gets You So Far

In our early bracket write-ups analyzing each year’s tournament, we often highlight the “most under-valued” picks to get to the Final Four from each region. Rarely, if ever, is one of those teams a No. 1 seed, and they’ve included as high as a No. 10 seed (Wichita State in 2017).

And every year, we write about those value plays to the Final Four: “[t]hat’s certainly a fun bracket, but it’s not going to be the smartest one for the overwhelming majority of pools.” We also point out that the most common result by going that “all value” route would be to finish with zero or one Final Four team correct.

As a group, the teams we’ve highlighted as value Final Four picks have played better than their seed expectations. Most of them were good plays that advanced farther than the public expected and provided value, but only a small percentage have reached the Final Four.

So, simply making all “best value plays” based on the difference between advancement odds and public pick popularity is too risky for all but the largest pools. You don’t win small pools by making risky picks expected to net you significantly less than one Final Four team.

Use a Risk-Based Strategy That Fits Your Pool

In most bracket pool scenarios, the ideal risk and value balance is between picking all value picks on the one hand and all favorites on the other. It usually means having some value picks interspersed throughout the bracket. From year to year, your “value bets” may become more concentrated on fewer key picks (e.g. a big gamble on your NCAA champion pick) or spread across a greater number of earlier-round picks.

How Much Risk Should You Take?

Now that you have a solid understanding of how to use predictions and public picking trends to evaluate individual games and upsets, you also need to craft a high-level strategy to win your bracket pool. Your high-level strategy should be driven by one simple question:

Given the number of people I’m competing against, my scoring system, and other dynamics, how much risk do I need to take to maximize my odds of winning this pool?

The answer to this question is critical because it influences the logic you should apply to many individual bracket decisions. More than any other variables, the number of people in your bracket pool and your scoring system should determine whether you use an overall conservative (picking mostly favorites) versus aggressive (picking some significant upsets) strategy.

The laws of probability dictate that the more people in your pool, the lower your odds of winning. The larger your pool is, the more likely somebody will pick some highly improbable outcomes and, by sheer luck, get a bunch of them right. To provide an extreme example, in ESPN’s 2011 bracket contest, which featured millions of players, two people picked the entire Final Four correctly, even though it featured an 8-seed, Butler, and 11-seeded VCU, who was a play-in team!

But in most small pools that same year, simply hitting on one Final Four team in a wacky year while performing better than others in the early rounds may have been enough to finish in the money.

Small Pool Strategy: Minimize Risk

In a bracket pool of 10 people, it does not pay to get all wild and crazy with your picks. All else being equal, you’re starting with 10% odds to win that pool, which isn’t bad at all. You have much more to lose making risky picks than in a 1,000-person pool, where your base odds to win are 0.1%.

In a small pool, don’t even think about making a lot of long-shot picks in a traditional scoring system. The primary strategic blunder in a small pool is picking too many upsets, especially in the late rounds.

With only a few entries to beat, the chances that the other entries catch enough upsets are minor. Sure, it could happen, but upset results with low public popularity will not hurt you. Outcomes like No. 11 seed Loyola-Chicago advancing to the Final Four in 2018 and South Carolina doing the same in 2017 as a No. 7 seed had such low pick popularity that in most smaller pools, no one picked those outcomes.

More often, the most costly outcomes in a small pool are those where a popular team you did not select advances deep into the tournament. As a concrete example, in the 2018 tournament, Michigan reaching the final (as a No. 3 seed of decent popularity) was far costlier to those that did not have them than Loyola-Chicago reaching the Final Four.

Thus, the more optimal strategy in small pools is to limit your risk and avoid picking extreme results with low odds that could sink your chances.

Mid-Size Pool Strategy: Balance Risk and Value

As pool size increases, so should the risk tolerance. The number of value plays should increase but should not solely drive decisions. In many bracket pools, two key areas in determining who wins the pool are:

• Picking the right champion (often) and maybe the opponent in the title game.
• Doing well in picking the mid-seeded or toss-up games in the first three rounds (sometimes).

Our mid-size pool brackets may concentrate risk and value plays in one, but often not both, of the two bracket areas mentioned above as a hedging strategy. The key is to have the appropriate overall risk profile given the scoring system and pool size, but that risk need not be spread equally across all parts of the bracket.

If you are very conservative in choosing the winners of your late-stage games – let’s say you have the two most popular choices meeting in the final – then you’re not differentiating yourself from many competitors. In this case, a more aggressive value upset-picking strategy in the earlier rounds should increase your relative odds of winning your pool.

Conversely, you can go with a very conservative early bracket and focus your risk on avoiding the most popular NCAA champion pick or putting a few very good but undervalued teams in the Final Four.

In small to mid-sized pools (between 25 to 100 people or so) especially, these types of risk hedging and balancing strategies have proven highly effective for us over the years. With that number of people, it usually takes some success at both ends of the bracket to win, but even a highly effective early or late-round strategy can secure a prize some years.

Large Pool Strategy: Value Comes to the Fore

If your goal is to come in first on ESPN or in any relatively large pool (say several hundred people or more), picking all the most popular teams is generally a terrible strategy. You typically take substantial risks in huge pools to get a better shot at placing. This is because, while any individual entry is unlikely to nail the right combination of teams to advance deeply, with a large group, some entry is bound to hit those long-shot plays.

Few people can get themselves to alter their strategy based on pool size since it requires them to think objectively and, oftentimes, to make unpopular picks. It’s emotionally challenging, but you gain a considerable advantage if you can muster the guts to do it.

In large pools, public selections don’t differ significantly from how most people pick smaller pools. That means the favorites are over-represented, and some underdogs can have “pot odds” (a poker term referring to when some underdog hands can still be the right play because of the relative payoff). For example, suppose you are in a very large pool, and you can take an outcome with a 1% chance of happening (like a particular No. 5 seed to win the title), but the public is picking it 0.1% of the time. In that case, you can drastically improve your chances by picking that unlikely outcome.