Cognitive Biases
This month, I’ve decided to pause my series of articles on the basics of how to make your betting pay and look instead at some of those pesky cognitive biases that will try to derail you in your journey to betting profitability.
Cognitive biases are systematic thought processes that are caused by the tendency of our brains to simplify the processing of information using a filter of personal experience and preference.
They help us find mental shortcuts in navigating daily life (and our betting) but can often cause information to be interpreted poorly and result in poor judgements.
Here are a few that can be very damaging to our betting profitability:
The Trap of Recency Bias
Ever found yourself caught up in the web of recent events, unable to see beyond the here and now? Like having a spotlight shining brightly on recent results but blinding you to anything that has gone before?
That's recency bias for you and it can have a terrible effect on your betting profitability.
Imagine this:
You're watching a race and as it enters the final furlong, you see one out the back switch wide and come sailing past the entire field from last to first in a matter of strides, passing the other runners like they are stood still in comparison.
Then it hits you.
‘This what I’ve been missing all along – I’ve been ignoring hold up horses too much- past results data says they are not profitable in the long run – but I’ve just seen it with my own eyes!’
‘How could I have missed this? It’s as plain as the nose on my face!’
You immediately start adjusting your analysis of races to place far more weight on those runners that prefer to see a wall of horses arses in front of them.
In reality though, this is just recency bias playing tricks on you.
Our brains love to latch onto what's fresh in our memory and give it more weight than it should be given.
Just because you’ve just seen a thing happen, that does not make it more likely to happen again.
Next time you're tempted to adjust your stakes based on some recent ‘trend’ you’ve noticed, remember recency bias is always lurking trying to trip you up.
Optimism Bias: I’m a lucky one!
Optimism bias – the rose-coloured specs of the betting world.
It's that little voice in your head that says, “Hey, you're special. You're different. You can buck the odds’
Picture this:
You're at the race course, the sun is shining, your gangs all there and you are feeling like the king of the world.
‘I’m lucky today,’ you think to yourself ‘nothing can go wrong for me today!’
Every bet you make is a certainty and you're riding high on a wave of optimism.
Now, optimism can be a good thing, don’t get me wrong. It's what keeps us coming back and fighting the fight. And of course, nobody likes to feel that everything they back is going to lose.
But when optimism blinds you to the cold, hard facts, you are on a slippery slope to ill thought out bets, overconfident staking and, ultimately, leaky pockets.
Next time you're feeling like the luckiest person in the room, take a step back and ask yourself:
‘Am I making decisions based on hope, or on cold, hard logic?’ Then think it all through again.
Never allow optimism to cloud your judgement.
Confirmation Bias: Seeing What You Want to See
Have you ever noticed that we tend to see what we want to see, even when the evidence says otherwise?
That's confirmation bias for you.
It's like wearing a pair of glasses that only show you the parts of the puzzle you want to see.
Imagine this:
You’ve watched a horse in it’s last couple of runs where it’s finished well down the field.
You’ve noticed that it seems to be getting fairly tender treatment and you’ve come to the conclusion that they are not trying with it.
You decide that you are going to back it next time up in case this is the one where they take the brakes off.
Sadly, it finishes well down the field and it looks very much like the horse is a thinker or just moderate.
However, confirmation bias whispers in your ear
‘Hold on, I’m pretty sure the jockey didn’t truly ask for an effort there and he definitely eased down in the last couple of hundred yards.
Confirmation bias has now convinced you that a mediocre horse is a secret handicap blot and you are going to be sailing off on a yacht made of gold as soon as they take the brakes off.
You then leak fortunes following the nag for it’s next 8 runs with it never hitting the frame.
Maybe you weren’t seeing the entire picture?
Next time you're studying some video, keep an open mind and be willing to challenge your own prior assumptions.
Outcome Bias: Judging a Decision by Its Result
Ever made a decision that seemed like a winner at the time, only to have it blow up in your face? Welcome to the wonderful world of outcome bias, where hindsight is always 20/20.
Here’s the scenario:
You’re following a tipping service and soon after you sign up it goes on a horrendous run. #
The legs fall off every horse he tips, they refuse to race, run out, fall at the final fence etc etc etc. We’ve all been there.
You decide that it was a god awful decision to sign up with them and based on a short series of results you decide that your process for selecting a tipster is all wrong.
You’ve been taken in again, all tipsters are charlatans and you should probably give the game up.
In reality, if you’ve done some very basic due diligence, it’s much more likely that it’s just a bad run and there is nothing wrong at all with your tipster selection process.
Here’s the thing about outcome bias: it's easy to judge a decision by its result, but that doesn't mean it was the wrong decision at the time.
Sometimes, luck just isn't on your side, and no amount of analysis can change that.
So, next time you're feeling like Monday morning quarterback, remember: hindsight is 20/20. Foresight is where the money is made and where the real magic happens.
Trust your instincts, stick to your strategy, and don't let outcome bias and the short term vagaries of probability steer you away from a decent strategy.
Each one of these cognitive biases is like a little gremlin lurking in the shadows, waiting to pounce when you least expect it. They can and will de-rail you.
However, armed with some awareness of the problem and a healthy dose of scepticism, you can outwit the biases and learn to make good, informed, evidence based decisions.
