In very basic terms, a cognitive bias is an observed departure from rational judgment: a habit which the brain develops which leads us to judge things in an inefficient manner. When gambling, predicting results effectively requires the most rational judgment, so cognitive biases place us behind the eight-ball before we’ve even looked at our first formguide!
The good news however is that doctors, scientists and various other people in white coats have been studying this stuff for centuries, and have been able to at least identify and label different types of cognitive biases: again, check out Wikipedia for an achingly long list of them. So as natural as cognitive biases may be, at least we know they exist. Which means we can take steps to combat them.
Another core bias that affects gambling is outcome bias.
Outcome bias refers to a tendency by humans to judge an entire event, and the decision they or others took in the lead-up to it, entirely on the outcome. If you consider that cognitive biases are generally just shortcuts that our brains take when processing events, this becomes understandable.
If a football team lost, they performed poorly. If they won, then their performance was satisfactory.
Applied to gambling, you may take the example of favourite you backed in a race: you backed it at a short-price and it failed to win. Therefore, that must have been a poor bet.
The problem is that outcome bias completely ignores why something happened. And more importantly when it comes to gambling, it can place an enormous weight on factors that the gambler himself (or herself) cannot control.
Let’s say you’re trying to make money betting on horses, which is probably a fair assumption since you find yourself on this website. The first thing to recognise is that, dodgy jockeys aside, the punter has absolutely no control over how a particular horse will run. None. You have zero impact on the outcome of a race.
That sounds absurdly obvious. So how can you judge a punter’s performance purely on the outcome of a race? That’s outcome bias.
It entirely ignores the why. Why did the race pan out the way it did? Did one or more horses perform in an entirely unpredictable manner, be that positive or negative? If there were indeed factors that were entirely unpredictable, then you can’t judge the punter for not forecasting them: nobody can read the future.
Perhaps a horse was severely held-up in a manner that wasn’t identified on anybody’s speed maps. For a more extreme example: last Friday night at Moonee Valley, jockey Michael Walker suffered a severe back injury mid-race and was unable to effectively ride out. It affected the outcome (for his horse at least), but how on earth could anybody have predicted that?
We’ve spoken before about how important it is to review races after the fact – this is the first step toward understanding why something panned out the way it did, yet a lot of punters don’t even take the time to do that.
Once you can effectively review a race, you’ll know the factors that led to the result. More crucially, you’ll be able to work out whether you should have been able to predict them. If so, you’ve made an error in your form analysis. The beauty of racing is that there’s always another race and you can amend and evolve your process.
Assessing a package
When assessing a tips or ratings package, you of course don’t know the exact method by which the analyst arrives at their conclusions. So how do you judge them on anything other than the outcome?
The key lies in concentrating on the long-term. You cannot judge any analyst’s performance on the back on one race, one day, or even one month. A poor performance may be purely variance at work.
So look at the long term: does the analyst have a reliable, genuine set of results that demonstrate an edge over the market?
For an even longer-term approach, can you get an idea of who the analyst is? Our analysts Nathan Snow (New South Wales) and Trevor Lawson (Victoria) are good examples. Both are professional punters who’ve made their living as such for many, many years. If they’ve been able to do this over the long term, it’s fairly good indicator they have an edge over the market!
So next time you throw that quaddie ticket in the air, or feel like hurling the remote at the TV? Keep outcome bias in mind: you might start to save yourself considerable heartache.