Below is a picture of my grandson Alec’s NCAA bracket. Note that he predicted that UConn would beat Kentucky in the finals. Hooah!! But his bracket was not quite perfect – he only got 32 out of the 63 picks right. Nevertheless this placed him at #15 in his group of 132,787.
The top 20 brackets in the Quicken Billion Dollar Bracket Challenge each won $100,000. The winner had 49 correct picks and #20 had 44 correct picks.
It all sounds so close to perfection (49/63 = 78%), but the reality is that even the top bracket had miles to go before he made it.
Imagine if you got the first 49 out of 63 games right. You still had 14 picks to go. If you had a 60% probability of being right on the rest of the games then your odds of getting it 100% right would be .6 to the 14th power which is .0784%, or just shy of 8 in 10,000.
Quicken got plenty of buzz for sponsoring the contest. One writer estimated that they had received over a billion social media and PR impressions. We never heard what they paid Warren Buffet to insure the perfect bracket (I would love to know). But it took the Oracle of Omaha about 10 to 15 minutes to do the calculations and accept the deal. He said: “I hope I did it right.”
And of course the grand prize of $1 billion would be awarded over 20 years. If you wanted it all up-front, you would receive a mere $500 million. And Buffet didn’t even figure that it would cost him that much. He said that if someone went into the final game on Monday, April 7 with a perfect bracket. If you won the final game you would receive $500 million (less a small cut for Uncle Sam). If you had a 50% chance of being right (if you had Kentucky to win, you were better than that since they were a two and a half point favorite) then the expected value of your position was 50% X $500 million or $250 million. But you would have received a phone call from Warren that morning offering you perhaps a deal where he bought out your bracket right then in exchange for a check for $100 million. My guess is that 95 out of a hundred Americans would take Buffet’s offer in a heartbeat. So really Buffet was only at risk of losing $100 million and not $1 billion.
If one randomly completed a bracket with a 50% chance of getting any one pick correct, the odds were 1 in 9.2 quintillion (that is a million trillion) of ending up with a perfect bracket. Of course the early picks should be a bit easier than the later ones. When #1 Wichita State faced off against my old school #16 Cal Poly, you had pretty good odds if you bet on the favorite. But favorites inevitably fall and they fell at a regular pace throughout the rest of the tournament.
It was a fun tournament and a terrific promotion but any time that Warren Buffet wants to lay off a tiny slice of his action, I’m all ears.