Sports Betting & Decision-Making Bias

Sports betting has taken the United States by storm. By simply using our phones, we can now make a wager on virtually any game at any time.

Some people place small bets, some large, but everyone has to make his/her pick on available information that's often somewhat limited.

Frequently, non-professional bettors will use last week's game as a launching point toward their selection. Their recent memory fuels their choice, despite the fact the data from a week ago might not apply to the current circumstance.  

This decision-making process is called Availability Heuristic, a cognitive bias in which you make a decision based on an example, information or recent experience just because it's readily available.

This theory was developed by esteemed cognitive and mathematical psychologists Amos Tversky and Daniel Kahneman — even though it may not actually be the best evidence to inform your decision.

Their study found that information more easily brought to mind (more-readily available) is assumed to reflect more frequent and/or more probable events. In contrast, the information that is more difficult to bring to mind (less available) is assumed to reflect less frequent and/or less probable events.

In 1991, USC professor Norbert Schwartz advanced the Tversky-Kahneman study. 

Specifically, Schwarz sought to distinguish whether the frequency and probability judgments were the results of content of recall (i.e., number of instances recalled) or ease of recall (i.e., how easy or hard it is to remember those instances). This study thus demonstrated that the availability bias operated on ease of recall, not the content of recall.

People with great recall often become the perceived smartest in the room because no one challenges their memory or asks the fundamental question: How does this apply to our current decision?

Our memories can sometimes create a bad decision when we believe past recollection will help us solve the current problem. But when we can ask, "How does this apply today?" we then place context to the recent memory and avoid falling prey to Availability Bias.  

Professional sports bettors often will reveal they play numbers based on the imperial data — not simply the last game or recent memory.  They keep their decisions non-emotional, which allows them to avoid recency bias and fall victim to the consensus of the betting public.  Yes, they examine the last game and use the data to form their preparation.  Yet they don't hold onto that memory to formulate their next decisions.  

Sports betting, like life, is all about making the right choices.  When we become aware of the Availability Heuristic bias and recognize the potential for formulating the wrong analysis, we will make better choices.  We might not always be correct, but our process toward the decision will improve.