Behavioural Biases in Betting
Many sports bettors believe that finding an edge in the betting markets is all you need to succeed and make money in the long term. There is, however, another element to the psyche of sports betting that needs to be explored to give you the best possible chance of winning
There is, however, another element to the psyche of sports betting that needs to be explored to give you the best possible chance of winning.
You may not realize it but behavioural biases play a major part when betting or trading on sports. How the mind reacts in certain situations, positive or negative, will have an impact on your next selection and the one after that too.
Failure to acknowledge these biases will be detrimental to your bankroll and chances of success will slowly diminish. Instead of ignoring these biases we need to tackle and embrace them.
The most common behavioural bias is the “confirmation bias”. Finding reasons to justify your bet and ignoring the statistics and reasons why you should take a balanced, pragmatic approach.
We are creatures of habit and we often look towards familiar selection methods that have been reliable without considering the current state. Backing Manchester United at home in the 2013/14 season was a classic example of the confirmation bias.
Many punters will have fallen into the trap of backing United at home purely based on history. The Old Trafford club, priory to last season, won roughly 85%-90% of their home matches over the last decade (in 2010/11 they actually won 95%) but under David Moyes the good ship United was slowly sinking.
Yet people were still lining up to back them at heavy odds on prices despite the turmoil the club was in.
Closely linked with the ‘confirmation bias’ is the ‘optimism bias’. When we lose a bet, we tend to ignore the reasons why we lost and look towards the next bet with the attitude “Oh well, tomorrow will be better. The next bet will win.”
But if we are making the same mistakes in our selection process, then we will ultimately fail and repeat the cycle again and again.
Optimism is a wonderful trait to have in life but you need to leave it at the doorstep before entering the world of sports betting. It’s human nature to believe that future events will have a positive outcome. We are hardwired to believe that tomorrow will be better, when in fact it probably won’t be as great as you expected it to be.
At the other end of the spectrum is the ‘loss aversion bias’. Being cautious when in fact you should be sending your soldier’s into war, so to speak. This usually occurs after losing a bet or two, confidence is knocked and our approach changes.
Stakes can be dramatically reduced or we avoid making the bet at all due to the fear of losing again. No one likes to lose money, or have something taken away from him or her, so the mind effects how we react in this situation.
Two American professors carried out an in depth study on the PGA Tour and theory of loss aversion. They looked at the amount of birdies made against the amount of par putts from the same distance. It revealed that far more birdie putts were missed, as the golfer was playing a more conservative game.
However, when the golfer was faced with a par putt from the same distance, they played their more natural, aggressive game to ensure they didn’t face a loss. Which backs up the theory that losing a bet is felt twice as much as winning a bet.
Nevertheless removing emotion from sports betting is difficult, but this is when mental strength and belief in your methods have to be strong. It’s impossible to avoid losses when betting on sports, but you can minimise them by analysing why you lost and trying to avoid a repeat.
Mark Douglas makes an excellent point in his book - Trading in the Zone – when he says “To operate effectively in the trading environment, we need rules and boundaries to guide our behaviour. We need to create an internal structure in the form of specialised mental discipline and a perspective that guides our behaviour so that we always act in our own best interests.”
The book is geared towards trading on the stock markets but the same logic can be applied to sports betting. To operate effectively and limit the influence of behavioural biases we need to be aware of them and create safeguards to ensure we take a balanced and objective view of each and every bet we place.
Eradicating behavioural biases is virtually impossible, but understanding them and how they influence us is a step in the right direction for every sports bettor.