A simulation study of tanking in the NBA · Mechanism Design
Why is losing
the right move?
Every year, NBA teams deliberately lose games. The draft rewards losing. We ran the math and simulated an NBA designed to stop it.
30 Teams simulated
50 Seasons per run
5 Mechanisms tested
3 Agent types
About this study
Testing the debate, not just joining it
The NBA has adopted a new draft lottery mechanism, the 3-2-1 format, meant to reduce tanking incentives. Academics have proposed their own alternatives for decades. The league has tried reforms before. Everyone has a theory about what works. Almost no one has tested them against each other.
We ran 50 consecutive simulated NBA seasons under each of five mechanisms simultaneously, measuring how often strategic teams chose to lose deliberately and whether the draft was actually delivering picks to the teams that needed them most. Then we replaced every front office with an AI agent to see if the same incentive structures held under qualitative reasoning.
For the first time, the leading academic proposals and the NBA's own reforms are tested head to head in the same simulation framework.
What follows
Step 1
First, how does the NBA draft work?
Step 2
Why would a team want to lose?
One thing drives tanking: the value of a great pick. NBA 2K translates real player performance into numerical ratings. We use those ratings as a proxy for skill. The highest-rated players are the kind of franchise-altering talent that almost always goes first overall.
#1 PICK
Click to flip ↻
#10 PICK
Step 3
The crossover point
Making the playoffs pays. Two to four extra home games with sold-out arenas. National TV appearances that drive sponsorship deals. A merchandise surge that lasts for years. Economists estimate the total franchise value boost at around $200 million per appearance. In our model, that's worth 200 points.
Now compare that to the lottery. The average lottery pick is worth about 24 points in player value. Even the number one pick, at 100 points, is only worth that if you win the lottery outright. So why would anyone tank? Because at some point, your playoff odds get low enough that competing isn't worth it anymore. Drag the slider to find that crossover.
Your playoff probability 22%
No chance (0%) 50/50
What's the top pick worth? Normal draft year (pick #1 worth 100 pts)
Normal draft year (100 pts) Generational talent (200 pts)
Value of Competing
--
points
Value of Tanking
--
points
How to read this: competing has value because you might make the playoffs (200 pts). But you still get a lottery pick even if you miss. Tanking accepts a lower playoff chance in exchange for better lottery odds. The crossover happens when those two paths are worth the same.
Try sliding "top pick worth" to 200 (generational talent year). Watch how the math changes.
Compete. Playoff value beats the lottery at these odds.
Step 4
A season, decision by decision
Here's a real simulated team navigating one full 82-game season. Each decision point is where the team ran the math and chose whether to compete.
Step 5
Five attempts to fix tanking
The NBA and researchers have proposed several mechanisms to reduce tanking. Each takes a different approach. Click to explore how each one works.
NBA Lottery (Current Rules, 2019)
The three teams with the worst records each get a 14% chance at the number one pick, a flat zone designed to stop one team from hoarding the best odds. Teams ranked 4th through 14th worst get declining odds, from 12.5% down to 0.5%. Only the top four picks are lottery-determined. Picks 5 through 14 go by record.
This still incentivizes tanking. A worse record always means more lottery balls.
The baseline. Better than before 2019, but tanking still pays off.
Bilevel Ranking
Draft positions are locked in at game 70 of the 82-game season. Whatever your record is when standings freeze determines your lottery slot. The final 12 games can only affect playoff seeding, not draft position. After the lock, losing has exactly zero lottery benefit.
Why it cuts tanking: once standings lock, there's nothing to gain from losing. The last third of the season becomes honest competition.
Eliminates late-season tanking. Some early-season incentive still remains.
COLA: Carry-Over Lottery Allocation
Every non-playoff team earns 3 tickets per missed season. Record does not matter. Follow one team, two universes, three seasons.
0 losses (tank) · 0 losses (honest)
1 of 4
For reference: cost of winning a top pick
Landing a top pick resets your ticket count. The better the pick, the steeper the cost.
#1Full resetback to 0
#2−75%keep a quarter
#3−50%keep half
#4−25%keep three-quarters
#5–14No costkeep everything
Fall to pick five and tanking bought you nothing anyway. Land the best player and you start over. You earned that pick the same way whether you won 20 games or 40.
Weighted Loss Mechanism
Lottery position is based on a cumulative loss score where early-season losses count far more than late ones. The weight decays exponentially. A loss in game one is worth twice as much as a loss in game 20, and four times as much as a loss in game 40. By midseason, tanking buys almost no lottery benefit.
Why it reduces tanking: the payoff from losing shrinks continuously. There's no single cutoff to game the system around.
Continuous decay. No hard cutoff to time tanking around.
NBA 3-2-1
The NBA has approved this as a three-year pilot, beginning in 2027. The incentive is deliberately inverted. Teams ranked 4th through 10th worst get 8.1% odds at the first pick, more than anyone. The three worst teams get only 5.4%. Finishing last is now actively bad for lottery odds. The reform expands the lottery to 16 teams, adding Play-In losers as eligible teams at 5.4% and 2.7%. Our simulation includes all 16 teams.
Finishing last is bad for your odds. The worst three teams hold about 5.4% each. The middle group holds 8.1%. Teams compete to stay out of the bottom, not reach it.
The risk stays at the boundary. A bubble team in a strong draft year might still decide a missed playoff is worth more than a first-round exit.
Lottery odds at number one pick, by draft rank
Season timeline: standings lock at game 70
Ticket accumulation over 5 missed seasons
Loss value by game number (half-life = 20 games)
Odds at pick 1, by team rank
current rules, 2026
the worst teams just lost their advantage
The Simulation
How much does each reform actually cut tanking?
We ran 50 simulated NBA seasons under each mechanism with strategic teams that calculate their odds every game. Scroll to reveal each mechanism.
When During the Season Do Teams Tank?
Each mechanism creates a different incentive window. Watch how tanking pressure builds, peaks, and cuts off under each set of rules.
Beyond Tanking
Does less tanking mean fairer drafts?
Suppressing tanking only matters if the mechanisms also help the teams that genuinely need good picks. We track two things for every mechanism.
How well do standings reflect true team quality?
We compare each season's final standings against each team's true underlying skill. Zero means the best teams won the most. A higher score means more disorder between talent and results. All five mechanisms land in a tight band. The reform design barely affects competitive balance at these tanking rates.
Average draft pick for the 8 weakest teams
Lower is better: weak teams get earlier picks.
Which picks do the weakest teams actually receive?
Since our simulation assigns each team a true skill level, we know which three teams were genuinely the weakest each season, not just which three lost the most. Each bar shows where those teams' picks actually landed. Every bar adds to 100%. More bar on the left means the draft is finding the teams that need help.
How long do teams stay out of the playoffs?
A mechanism that redirects picks to bad teams should help them improve faster. We tracked every consecutive run of missed playoffs across all 30 teams and 50 simulated seasons, then grouped those droughts by length. The average drought is shown to the right of each bar.
The AI Experiment
What if AI ran every front office?
We replaced every team's front office with a Claude Haiku language model, the same AI that powers many commercial chatbots. Each AI received real standings, game counts, and the rules of the mechanism, then had to decide: compete or tank? No hints. No training on the right answer.
Policy Recommendation
What should the NBA do?
No mechanism eliminates tanking entirely. Any lottery that links record to picks will always have some team somewhere with a reason to lose. The goal is to make tanking costly enough that it only makes sense in extreme situations.
3-2-1 cuts tanking from 6.9% to 0.9% in our simulations. All 14 picks go through the lottery, so even mediocre non-playoff teams get a real shot at any slot. Teams near the bottom three threshold have genuine reason to compete instead of lose. And it requires no new infrastructure. Just a rebalancing of balls.
0.9% tanking rate
3-2-1 closes the door on tanking for teams already out of playoff contention. But it leaves another door open. In a year with a generational prospect, a bubble team might decide the pick is worth more than a first-round exit. Miss the playoffs on purpose, collect your three lottery balls, take your shot. The system cannot stop that calculation. And if it happens, the cruel irony is that the worst teams in the league get fewer balls than the teams that chose to lose. The prospect most needed at the bottom goes somewhere else.
One more thing: the NBA has approved 3-2-1 as a three-year experiment. If it doesn't reduce tanking in practice, they'll revisit.
Our results assume a playoff berth is worth 200 simulation points. Raise that threshold, or introduce a generational-class prospect, and the calculus shifts. The mechanism's robustness to extreme draft years remains an open question.
Tier A 2 balls vs Tier B 3 balls: the inversion
If 3-2-1 proves effective, two options are worth building on. A Bilevel standings lock at game 70 would cut tanking further with no new infrastructure. Or the league could move toward COLA, where lottery position is based on years out of the playoffs rather than current record. That approach carries the strongest theoretical guarantee: tanking is never the rational move.
Teams are smarter, they are creative, and they respond. We move, they move. So we're always looking to see whether there's yet a better system.
Adam Silver, NBA Commissioner
Grant Valentine · 2026
Simulation: 30 teams · 50 seasons · 3 agent types (Strategic, Honest, Claude Haiku) · 5 mechanisms
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Want to read more?
This visual essay accompanies a formal research paper on draft mechanism design. The proofs, simulation details, and full results are in the paper below.