Outcome bias refers to the tendency to judge a decision based on its outcome rather than the quality of the decision at the time it was made. Some poor decisions result in success, while many good decisions result in failure. But the outcome alone doesn’t tell the full story.
Outcome bias affects a high percentage of gamblers for two main reasons:
- We live in a world that links money and profit to success.
- Sports is an outcome-driven industry.
The combination of both gives gamblers the inclination to judge past decisions by wins and profits alone.
An Example Of Outcome Bias
To illustrate outcome bias, let’s evaluate the outcome of a wager placed in a casino.
Imagine there’s a game of Blackjack where a player, ‘Maverick’, has a 18 and the dealer has 10.
In this situation 18 is strong, and it’s a statistical no-brainer for Maverick to stand. But let’s also imagine that Maverick doesn’t do things normally and he feels a “vibe” that he will improve his hand by hitting. That is, he thinks he’ll pull an Ace, 2, or 3. He decides to hit.
A 2 card is drawn. He now has 20. The dealer flips over and reveals a 5. Maverick wins! But did Maverick make a good decision?
Those most affected by outcome bias would reason that Maverick’s risky move won the game, and therefore it couldn’t have been a bad choice. But the fact remains: Maverick made a very poor decision at the time of the bet; one that’ll inevitably backfire on him a lot more often than it’ll benefit him.
Outcome bias can negatively influence gamblers of all forms of betting, including sports.
Outcome Bias In Life
We live in a society that infers that whatever decisions lead to profit were ‘right’. At least until it goes wrong…
I have a few friends working in trading roles at investment banks who know this all too well. I found it interesting to learn how much of their trading ability and value to the company is measured in terms of profit alone and, more strikingly, how little is measured by the methodology and decision making process used to earn it.
One friend spoke of the enormous stress he was under to increase his trading profits in order to continue working at his job for another year. He told me that his colleagues, who felt the same pressure, had resorted to lumping on increasingly larger trades in an attempt to bump up their yearly performance. Do you see where I’m going with this?
If those high risk trades made a profit then that would be deemed ‘right’, irrespective of whether it was smart, responsible or even sustainable. Such ‘winners’ would be rewarded with job retentions and bonuses, while ‘losers’ would be deemed to have made bad choices.
This exact kind of outcome bias is ever-present in sports betting. Gamblers have a tendency to appraise past decisions on results alone, with little regard to the selection process used.
Outcome Bias in Sport
Sport is an outcome-driven industry that only fuels poor sports betting decisions.
Take football as the prime example. The obsession with winning supersedes common sense across the entire game.
Managers are regularly condemned by their clubs based on results, and not performance.
Imagine the Man United manager is under fire after a string of consecutive losses and it’s crunch time this weekend in upcoming Manchester derby. Can he save his job?
Suppose the players respond to the pressure and fight for the manager’s job. United dominate the game, hitting the post twice, missing a penalty, and drawing multiple saves from the opposing goalkeeper. In 90+4 United score a the wonder goal they deserved — but it was controversially deemed offside by VAR and struck off. Final score: 0-0.
The outcome of the match will often dictate whether or not the manager is deemed fit for the job; hence in this scenario the manager would be sacked.
Yet on the flip side, if United got the rub of the green and won 3-0 as deserved, then the board would almost certainly view the current situation in a positive light. They might even see the manager as “turning a corner”. In either case, there’s a tendency for score lines to dictate big decisions in football, no matter how irrational it seems.
The “do or die” culture in football makes it harder for bettors to think in terms of probabilities, potential, luck — or anything other than pure results. It’s a challenge to switch between the two modes.
Misplaced Credit & Criticism
Goals and wins mean everything to emotional football fans. But this can heavily impede sound judgements.
Imagine a team played an uncharacteristic 4-4-2 formation in a match. How might die-hard fan ‘Biased Bob’ evaluate that decision?
- If the team won Bob would feel compelled to call up a popular radio station to sing the praises of the manager for making such a bold move.
- If the team lost Bob would feel compelled to call up a popular radio station to discredit the manager for being so naïve and arrogant.
Therefore Bob is biased towards the outcome of the game.
While Bob might represent an extreme case, many sports fans feel so emotionally attached to their club/player that poor judgements are commonplace.
The “if it won, it was right. If it lost, it was wrong” mindset is dangerous when carried forward from sports fandom into sports betting. It’s too binary.
Avoiding Outcome Bias In Sports Betting
Bettors must change their perspective of what a “good” and “bad” bet actually is.
Good bets can lose, and bad bets can win. The result itself does not change whether the decision to place the bet was wise, or unwise. A good bet is that had the odds in your favour; where you found value.
For instance, suppose the fair odds for an underdog to win a football match is 6.5. One bettor accepts odds of 5.0, and another accepts odds of 7.0. If the bet wins, both bettors succeeded in terms of selecting the winner. But only one bettor succeeded in terms of finding value: the one that took 7.0. This is how any truly successful gambler will measure the quality of their bets.
You can learn more about assessing your betting performance from my articles:
- Betting Variance Explained – why winning and losing streaks (swings) are very common in sports betting.
- Betting Bold: The Art of Wagering Against The Grain - September 11, 2023
- August 2023|Top Football Tipsters Of The Month - September 6, 2023
- August 2023 | Top Horse Racing Tipsters Of The Month - September 5, 2023