The value of strategic unpredictability: A natural experiment from baseball

Abstract

Strategic situations in which decision-makers need to be unpredictable are common. This paper introduces a measure of the value of strategic unpredictability for a player and shows that it determines (i) the player’s incentive to follow equilibrium and (ii) the power of statistical tests of whether the player’s opponent follows their equilibrium mixture. We use data from a unique natural experiment in Major League Baseball to estimate the value of strategic unpredictability for pitchers. We find that the Houston Astros gained a significant advantage by stealing opposing teams’ signs, thereby reducing opposing pitchers’ ability to be unpredictable.