Conservatism bias is the tendency to preserve the status quo, or existing conditions, rather than adopting new or innovative approaches. It is often associated with a reluctance to accept radical change. This bias favours the familiar over the unfamiliar, and the known over the unknown.
To a certain degree, conservatism is beneficial in betting as it protects bettors from recklessness. However on the flip side, it can lead to slow adaptation, lack of improvement — and ultimately missing out on high-value opportunities.
Conservatism Bias In Investing
The concept of the conservatism bias is most recognised among financial experts and investors. It suggests that some investors tend to take an overly cautious approach when evaluating potential investments, opting to avoid losses rather than seizing opportunities to their fullest.
Investors most prone to conservatism bias would opt to protect their funds by focusing on opportunities that have a low risk profile and a high certainty of a steady, modest, returns. However, making ‘safe’ decisions can lead to the avoidance of other investments with the potential for higher returns (eg. stocks, bonds) — albeit with a greater degree of risk.
Extreme conservatism bias can be seen in the behaviour of investors who are unwilling to take the plunge into excellent propositions due to fear of the unknown. For example, a ground-breaking, unique start up with enormous potential, or new and exciting markets with the promise of continued growth.
A quote springs to mind: “you can’t win if you don’t play”. This is essentially the crux of the conservatism bias for investing and sports bettors alike. So it’s important to be aware of this tendency and to take steps to mitigate it — which I’ll get onto later.
Conservatism Bias In Sports Betting
By approaching sports betting too conservatively, there’s a risk of missing out on opportunities and failing to capitalise.
Here’s how sports bettors can miss out on due to conservatism bias.
Fear of The Unknown
One of the primary drivers of conservatism bias in is the fear of the unknown.
This can be seen in the behaviour of bettors who refrain from delving into unpredictable sports or betting markets — instead sticking by those which can be measured most easily by statistics (e.g. darts).
It’s also present in those who opt to stick by a particular approach, such as Matched Betting, rather than progressing into potentially more profitable “unknowns” — such as Value Betting. Like with investing, the fear of what we don’t fully understand can lead to the avoidance of opportunities that have the potential to produce higher returns and more growth.
A “best of both worlds” scenario might be a more balanced approach involving multiple strategies — thereby reducing the exposure to any one method.
Failure to Adapt
Adaptation is vital if you’re to achieve sustained success in sports betting. Consider the following:
- Speed. Good odds don’t last long. Plus EV odds will get snapped up by other bettors, and slashed by bookmakers. If you fail to adapt to the speed required, you’ll certainly miss out on opportunities.
- Competition. Strategies don’t always stand the test of time. A betting strategy that once worked well can stop producing positive results. This is commonly found in Betfair trading strategies, once competitors work out what you’re doing and adapt their strategies accordingly. You must keep on changing and improving.
- Offers. The value of sports betting offers will diminish once you get through the signup offers. Hence why Matched Betting is not going to be your best long-term strategy. You need to look towards alternative methods.
- Account restrictions. The leniency a bookmaker once had towards profitable bettors can change at any moment. A gold mine today might be gone tomorrow. You can’t rely on any one bookmaker if you want to succeed long-term.
Sure, you absolutely need to make most of opportunities while they’re around. But in the sports betting world, you’re constantly faced with obstacles. So preserving the status quo and sticking by what you know will only take you so far.
The failure to adapt to obstacles is the ultimate downfall for many bettors that embark on a professional betting career. A less conservative approach is required for continued success.
Risk Aversion
Minimising potential drawdowns by managing your stake sizes and capping your odds is good practice. But playing it too safe can also be to your overall detriment.
Consider the case in Blackjack where the dealer has a 5 and you have 10. Anyone that’s played the popular casino game before will know that this is a great hand; it goes without saying that you double down because the odds are in your favour. However, the most risk averse players may feel that the potential to lose double their stake is too high, instead opting to ‘hit’. This isn’t the optimal move: it’s one that will increase the house edge of the casino and the players’ losses in the long run.
Similar situations arise in sports betting, often requiring the bettor to take on more risk in order achieve maximum gain. For example, value bets are commonly found in mid-market prices for horse racing and often have a larger ROI than those which appear at lower odds. But if the bettor has limited their odds to 3.0 due to reduce risk, then the vast majority of such opportunities will be missed.
In other cases bettors will hesitate when presented with a potentially high value opportunity by looking for ways to reduce their risk. For instance, hedging against bets using the betting exchange, or cashing out too early. While banking a profit can feel like a win, it usually means that potential upsides are not fulfilled — meaning lower profits in the long term.
While betting within your means is the first and most important consideration to have as a sports bettor, you should also recognise that some risks are worth taking. If there’s a mathematical edge in your favour, then being overly risk adverse and fearful of the potential downside will considerably limit your profitability.
How To Avoid Conservatism Bias
There are ways that you can make a conscious effort to avoid the conservatism bias in sports betting:
- Research every bet you place. Before placing a bet, make sure you have done your due diligence and have a sound understanding of the event and its key variables. Use past statistics and track performance over time, review historical results, and look for any match-up trends that might give you an edge.
- Allow the numbers to make decisions for you. In the same way you shouldn’t be over-confident, you also don’t want to be so under-confident that you fail to act when an opportunity arises. Don’t let your emotions get in the way of making a smart bet. Allow your stats/mathematical method to make decisions for you (within strict parameters, obviously).
- Remember that without risk there’s no reward. Don’t be afraid to take risks when the right time comes. If the odds are in your favour, take the opportunity in the knoweldge that it was the right thing to do regardless wheteher or not it wins. In the long run you’ll succeed that way.
It’s important to emphasise that avoiding the conservatism bias does not mean that you should disregard the positive aspects of risk aversion. So please make sure you continue to follow the basics:
- Never chase losses. Don’t try to make up for losses by placing larger bets; this will inevitably lead to more losses. Avoiding conservatism is not about becoming more reckless.
- Set a budget and stick to it. Set a betting budget (a bankroll) and stick to it. Don’t bet more than you can afford to lose. Be disciplined.
- Take regular breaks. Step away from all gambling activity to ensure that you’re making logical decisions based on a proven strategy. If you’re ever in doubt, spend more time back-testing your strategy before continuing.
Conservatism bias is one of the most interesting sports betting biases because cautiousness is the main downfall, as opposed to over-confidence or impulsiveness. Striking the right balance between these extremes takes experience, open-mindedness, a level-headed approach — and a little bravery.
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