The outcomes so far in the NCAA men's basketball games have surprised most people. The biggest surprise is Virginia Commonwealth University (VCU) beating the mighty Kansas, President Obama's choice to win the whole thing. VCU's wins are surprising. But it, and some of other outcomes, illustrate two principles, one in economics and the other in statistical reality.
The economic principal is the idea that the margin matters. Think of how some of the outcomes would have changed had a few little things changed. I'm thinking, for example, of the close University of Arizona game against U Conn. (U Conn won 65-63.) What if Arizona's star, Derrick Williams, hadn't been called for just one touch foul? Then he would have been on the floor longer and Arizona might have won. Or, in some of the other games, what if two of a team's 3-point attempts had been a few inches shorter or longer and gone in? Again a different outcome. Margins can matter a lot.
And the statistical principle, which is related to the above, is how much randomness there is. One team can be a little off its game for most of a half and, although it is a better team generally than the team it's playing against, this can make a difference. There's always randomness. So much that happens in the world is random. So the moral of the story is that the degree of certainty otherwise-intelligent people have about their bracket choices is just not justified.
A related moral is that when you play a lot of games and win enough to get to be one of the 20 or so top picks in the choice of 68 teams, you've done a good job. What happens from then on is a mix of skill and randomness. My favorite two stories are ones that illustrate a team official who understood and a pair of owners who didn't.
The team official I have in mind is Billy Beane, general manager of the Oakland A's. In his book, Moneyball, which is one of the best applied economics books of the first decade of the 2000s, Michael Lewis tells how, once Billy Beane gets his A's to the playoffs (162 games is enough to wipe out a lot of randomness), who wins is random and so he doesn't bother watching.
The owners I have in mind in the other direction are the Maloof brothers, who own the Sacramento Kings. Coach Rick Adelman brought this small market team to the playoffs every year he was coach (1999-2006.) In 2002, Adelman took the Kings to the Western Conference championship where they lost in 7 games to the Los Angeles Lakers. And what did the Maloofs do in 2006? They fired Adelman.