Cognitive Biases – Betting mistakes everyone makes
Here are the five most common cognitive biases of sports bettors that lead to mistakes:
1. Recency Bias
Recency bias is when we give more importance to recent events when we make decisions. It’s a mental timesaver based on the idea that if something can be remembered easily, it must be important. There are multiple examples of this trap in betting.
Here are a few:
- You make a right decision not to bet, but it wins (missed winner). So next time in the same situation you back it (even though it’s a bad bet)
- You make a terrible decision to bet, and it wins, so you make the same bad decision next time and back it again.
- When you’re on a winning streak or get a significant return, you bet more substantial amounts on more bets (instead of the correct amount on value bets) because you think when you bet, you win.
- You notice a specific characteristic in a recent winner, so decide that’s an important factor in picking future winners. For example, you choose to oppose every team that played a mid-week European (UCL or UEL) game because you had some success with this strategy one weekend.
- Increasing your volume just because you’re on a winning run.
- You quit your betting strategy and give up on your bankroll management because of a small losing run.
Example of Recency Bias in Football Betting: Leicester won the Premier League in the 15/16 season having been priced as big as 5,000/1 before the season began. Because such attention was brought to this by the media and Football pundits, Bookmakers had an influx of bets the following season on all of the teams that were prime candidates for relegation. Bookmakers took a higher than average amount of bets on Burnley (Finished 16th), Hull (Got relegated) and Middlesbrough (Got relegated) to win the Premier League in 16/17 because of recency bias.
2. The Gamblers fallacy
This is an appropriately named bias describing the tendency to look for patterns in past events that don’t have any predictive value. The most straightforward example of this bias is in the game of roulette. We’ve all seen the sign above the roulette wheel that shows the results of the last 20 spins. If the last ten have all landed on a red number, the natural inclination is to believe that black is “due.”
But in this case, the history means nothing because each spin of that roulette wheel is random and independent. There is nothing learned from the past spins, though many gamblers have stared at that past pattern of spins and believed that black was an advantage play on that 11th spin.
Similarly, bettors will look at past results in sports and look for patterns that they hope will predict the future. Say a good Football team, like Real Madrid, have lost five games in a row; the thinking is that they certainly won’t lose six in a row. Yet for the most part, each game Real Madrid play is an independent trial; the fact that they have lost five in a row isn’t an indication that they are “due” to win a game.
Sports bettors will also face this issue, believing after winning a few bets in a row that they are on a hot streak. They may end up betting more games than usual because they want to take advantage of that hot streak. But their hot streak is likely a product of variance, not any higher power controlling their luck or elevating their skill. Their win percentage for their next bet will be in line with what their historical win percentage is, not some recent streak of good fortune.
3. Outcome Bias
Outcome bias is the tendency to judge a decision by its outcome rather than the quality of the choice at the time it was made. When a bet loses, we tend to see it as a bad bet, but when it wins, we tend to see it as a good bet. The quality of a bet is based on the process that went into making the selection, not the result. Individual results are just random luck.
It’s worth keeping half an eye on individual results to pick up whether there is something valuable to be learned, but never consider a bet as bad simply because it lost (or a bet to be good just because it won).
An extreme example here is if you took odds of 1.5 on a coin toss and won. Yes, you won, but it was still a bad bet. If you took odds of 2.5 on a coin toss but lost, it was still a good bet and one you should make that bet as often as you can regardless of the short-term outcome
So it is clear that a good decision to bet remains a good decision regardless of the result.Analysis of results must be done on large sample sizes, not individual events. In the long run, the same good bet that lost today will be the same bet that makes you a nice profit in the future.
4. Hindsight Bias
We’ve all met that person who continually says “Well I knew that was going to happen” “I knew that team was going to lose because of blah blah blah” or “How could you not have seen this coming? It was so obvious” – This Bias is called the Hindsight Bias
This particular bias can be a problem if we allow it to our cloud our judgement and start second-guessing our decisions. It can lead to us adjusting our strategies or changing our thought processes when there’s no real need to. Often, things only seem obvious after the event because we know the result by that point. It doesn’t automatically mean that our original forecasts weren’t intelligent and well thought out.
5. Confirmation Bias
We all rely on our feelings and beliefs when betting on Sports. They’re ultimately what drive our betting decisions. Here are some examples.
- There’s an upcoming game between Liverpool and Manchester City, and we believe we’re going to get another high scoring game as the two previous meetings this season had a combined 12 goals (5-0 and 4-3)
- It’s the start of the World Cup, and we confidently predict that France will win it as they have the largest selection of quality players at their disposal
- Spurs are taking on West Brom, and we believe Spurs are the far superior team and will have no problem covering the -1.5 goal spread
These are all straightforward examples of how our views can lead to somewhat obvious predictions and expectations. Things aren’t always so clear-cut of course, but it’s important that we have faith in our views when we feel strongly about them.
Conversely, we need to be willing to change our opinions when necessary. It’s easy to be so devoted to our beliefs that we never allow anything to change them. As a result, when doing our research and analysis, we tend to focus only on the information and data that supports our opinion. We ignore anything that might suggest it could be wrong. This tendency is known as confirmation bias, and it can be problematic for football bettors. Part of the problem is that most bettors don’t even realise that this particular bias exists.
Like most cognitive biases, confirmation bias primarily affects our subconscious. It’s not always easy to recognise that it’s changing us though. We instinctively pay attention to anything that reinforces our existing beliefs, while disregarding anything that challenges them. We’re not doing this deliberately; actually, most of the time we don’t even realise that we’re doing it.
How to overcome Confirmation Bias?
The simple answer is that we can’t. Not completely anyway. This is just the way our brains work. Our subjectivities are always going to be there, no matter how objective we try to be. Even if we collect all the necessary data and information and attempt to review it neutrally, there’s always a chance that we’ll subconsciously interpret it in the way that matches our assumptions. So, then, what can we do? Now that we are fully aware of what confirmation bias is, we have to try our best to recognise when it’s affecting us.
We need to make a conscious effort to always take a step back before placing a bet. This will give us time to review our thought process and check that we’ve considered all the relevant factors. If we have any doubts, then it doesn’t hurt to look back at things for the second time. While this doesn’t eliminate the effects of confirmation bias, it will help to alleviate them.
6. The Bandwagon Effect
The bandwagon effect is a psychological phenomenon in which people do something primarily because other people are doing it, regardless of their own beliefs, which they may ignore or override.
One of the latest examples of the Bandwagon effect was when Conor McGregor of UFC fame stepped into a boxing ring with the legendary undefeated 49-0 boxer Floyd Mayweather. You might think that the odds for a fighter with ZERO professional boxing fights going up against possibly the greatest boxer of all time would be a lot bigger than 4/1 but that’s where you are wrong. Bettors flocked to the bookies to bet on McGregor (+90% of bets in Vegas) in the belief that Mayweather was too old and that Conor would be able to KO him like he had done to so many adversaries in the Octagon.
This bandwagon effect was fueled by both Conor and Floyd two of the most influential names on Sports Social media along with countless other media outlets insisting that the Irishman did, in fact, have a chance against the 49-0 undefeated Mayweather.
The contest proved to be a walk in the park for the undefeated Mayweather who was seen smiling at Conor during the fight when the Irishman landed his best shots. Deep down both of these fighters knew the outcome of the fight. They just tried to sell the fight, and we can’t blame them for that.