How Understanding Win Probability (WP) in Baseball Helps Asset Management

JD Solomon
5 hours ago
3 min read

Understanding the definition of probability is crucial for making informed decisions and communicating effectively in high-stakes situations. That's true whether it's baseball win percentage, the chance of rain, or activities related to the equipment and facilities you own. Understanding the underlying context behind the probabilities is crucial before applying them in practice.

Probability: The mathematical measure of the chance of occurrence expressed as a number between 0 and 1, where 0 is impossibility and 1 is absolute certainty.

Win Probability (WP) in Major League Baseball

Win Probability (WP) in Major League Baseball is a statistical estimate of the likelihood that a team will win the game at a given point. The calculation isn’t specific to the two teams playing that day. Instead, it’s based on historical league-wide data combined with the current game state.

Here’s How Win Probability Works

Win Probability models are built from decades of play-by-play data across all MLB teams. In the case of MLB.com, Statcast uses recent seasons' play-by-play data as the baseline.

“Recent seasons” are generally weighted toward the last 5 to 10 years, so the model reflects modern scoring environments (more home runs, fewer stolen bases, etc.). Other public models use the "modern era" as the historical timeline, while advanced private or betting models may adjust to use shorter time periods or different weightings.

MLB.com also treats all teams and pitchers as equal. Similar to “recent seasons,” private or betting models may adjust for do adjust for team quality, pitcher matchups, bullpen strength, and park factors.

For every possible game situation (inning, score differential, number of outs, runners on base, etc.), the model looks at how often the team in that situation went on to win.

Likelihood: the chance something will happen (synonym: probability)

The Likelihood of Rain

I often use the “chance of rain” in my communications workshops to show how the general population misunderstands probabilities. The punchline is that only one-third of participants understand the term.

For the weather, the “chance of rain” means how many days like this one it will rain. Like win percentage in baseball, it is essential to consider factors such as the length of the historical record and whether the forecast is specific to these teams (or for weather, this region).

The Likelihood of Failure

In asset management, the likelihood of failure is a crucial component of the classic risk equation used to prioritize activities. In those workshops, I often ask the questions "What is the likelihood that this piece of equipment fails?” and "If I had ten pieces of equipment just like this, how many would fail?” The two questions have the same meaning. However, the first will always yield a higher percentage than the second.

Like win probability in baseball, understanding the meaning behind the term probability means everything in how it is applied and communicated. That’s one reason teams should not quit when someone says their "probability of winning is low" in the middle of a game. The common misunderstanding of the term also helps sports bookies make a living.

Understanding Win Probability in Baseball & Asset Management

Please see Communicating Reliability, Risk & Resiliency to Decision Makers: How to Get Your Boss’s Boss to Understand for more information.

Note: For another example related to health, see Stephen Jay Gould's essay "The Median Isn't the Message" (1985). After being diagnosed with abdominal mesothelioma, Gould dug into the published statistics that the median survival was eight months and showed why that didn’t dictate his personal fate. Context matters. Individual prognosis depends on variation and treatment context rather than the historical record of everyone who has had the disease.

JD Solomon Inc. provides solutions for program development, asset management, and facilitation at the nexus of facilities, infrastructure, and the environment. Visit our Asset Management page for more information related to reliability, risk management, resilience, and other asset management services.