Friday 22 March 2013

Loss Aversion, the Sunk Cost Fallacy, and the Status Quo



After all the hours you’ve spent scouting players and tinkering to find the optimal combination for your fantasy football team, you’ve finally narrowed it down to something you’re happy with. Despite the crippling restrictions of the seemingly impossible budget, you’ve even managed to squeeze in that certain player, the one who’s shown glimpses of irresistible form and who you’ve been telling everyone will comfortably outscore not only his teammates, but also the rest of the players in the game. In your mind, he will almost certainly become the most important player to own, despite his lofty price tag. In fact, he was the first name on your team sheet and your biggest challenge was fitting rest of the team around him.

A glance at your main mini-league rival’s team only serves to fill you with confidence as you notice what you consider to be a distinct lack of fantasy talent on display. “I can’t believe he imagines that combination of players doing well,” you sneer, especially since you notice he’s selected the other expensive striker who plays for your star man’s team and who you can’t in a million years imagine scoring well. You’re already starting to think of novel ways to gloat about your mini-league triumph over your fiercest of rivals as the smug feeling of being at a distinct advantage begins to set in.

Weeks pass by, and the player who you’d backed to be a points machine isn’t actually performing that well. Sure, he’s looked dangerous in front of goal and has been creating chances aplenty for his teammates, but somehow the fantasy points just haven’t been coming his way. Unfortunately, your mini-league rival, the one who you’d written off due to his poor selection, is building a solid lead at the top of your mini-league and, at this rate, will be out of reach before too long. To make things even worse, the player who you’d written off as a poor pick has been raking in the points for not only your rival, but also for half of the teams in your mini-league and everyone who hasn’t got him yet is scrambling to bring him in, even at the expense of your star pick.

“Surely my star man will come good,” you envisage. “Surely he’ll reverse this point-scoring trend,” you muse. “Surely,” you convince yourself, “he’s due.” You’ve had this player in your team for weeks and feel that you can’t sell him now. You feel like you’ve passed ‘the point of no return’: to cut him from your team now would mean risking missing out on his imminent points haul. You’ve committed to having him in your team now and in replacing him with someone else, you would be admitting you were wrong all along. Anyway, you’re sure that the other player won’t possibly continue his good run of form and his plentiful supply of points is bound to dry up at some point. You can’t afford both without major surgery and sacrificing other areas of your team and you’ve therefore decided that you’re not selling your star man, and your decision is final.

Surely every FPL player can relate to this to some extent. That feeling of stubbornness that is provoked when evaluating a decision you’ve made that hasn’t paid off, even if it isn’t as extreme as our example above. This could perhaps be partly put down to a common error in judgement known as the sunk cost fallacy, which can in turn lead to irrational behaviour. This stubborn approach could be attested to the mistaken belief that resources spent in the past – in this case the time and energy spent gathering information and making decisions for your team, as well as fruitlessly urging him on – should be taken into account when making a decision, and that changing your mind now would mean that the time and energy you've invested would be wasted.

Weighing up the potential loss of points that would be incurred by selling your star man before he goes on his overdue run of good form, you’re even less inclined to make the swap. Despite the potential points to be gained by drafting in your rival’s star player at your current player's expense, the fear of missing out on your current talisman’s points somehow feels more powerful. This phenomenon is often referred to as loss aversion: people’s tendency to prefer avoiding losses rather than acquire gains, with some studies even suggesting that losses are psychologically doubly as powerful as gains.

As if there weren’t already enough psychological factors contributing to you sticking to your guns and holding your underperforming FPL star, the status quo bias could also influence on your thinking. This bias describes the irrational preference for the current state of affairs and, in this case, means there could be an increased value attached to sticking with your current player rather than switching to an alternative. Coupled with regret avoidance (the tendency to avoid decisions that you could easily imagine leading to regret), it’s clear the affect that this could potentially have on your decision-making.

In conclusion, next time you’re holding onto that player who you previously thought would do well (despite the subsequent evidence seemingly contradicting your decision), ask yourself if you’re falling victim to any of these errors in judgement.



Further reading:

http://en.wikipedia.org/wiki/Loss_aversion
http://en.wikipedia.org/wiki/Sunk_cost_fallacy#Loss_aversion_and_the_sunk_cost_fallacy
http://en.wikipedia.org/wiki/Status_quo_bias
*Dobelli, R. (2011) Die Kunst des klaren Denkens ('The Art of Clear Thinking'). Munich: Carl Hanser 

This article is the latest in a series called "The Art of Clear Thinking" which looks at various errors in reasoning that cause many of us to come to illogical conclusions which may in turn lead to bad decision making. I hope to enlighten and entertain in equal measure and who knows - it may even help you to improve as an FPL player!


Wednesday 21 November 2012

The Art of Clear Thinking - Group Consensus



As the manager of your very own fantasy football team, you soon come to realise the sheer complexity of something seemingly as simple as picking a combination of 15 players for your squad, picking 11 of your chosen few to play every week and bestowing the honour of the captain’s armband upon your very best player. In reality, there are hundreds of players to choose from, a multitude of factors to consider and the restrictions of a budget that never seems to be large enough. Once you consider that you also have the option to make transfers every week, this can be a little too much to handle, even for those of us who are seasoned players and the usually self-assured amongst us.

Naturally, we look to others for guidance. We seek people with equal or superior football knowledge to discuss our conundrums with in the hope of gathering more information, canvassing others’ opinions and equipping ourselves with as much knowledge as possible in order to make the very best decision possible. Sometimes, in desperation, we even seek the knowledge of those who aren’t particularly knowledgeable or even remotely interested in football but who may have that tidbit of information that will hopefully prove to be the final piece of the puzzle.

Many end up on various fantasy football sites, blogs and forums where thousands of people gather to share information, discuss findings, debate the best courses of action and thrash it out throughout the week and all the way up to that cruel deadline on a Saturday morning. A quick look through the electronic pages can allow us to gauge the opinions of many and asking people to rate our team, transfer plans and captaincy choice seems an ideal way to help us in making our own decisions. Certain trends often appear in discussions between users and more often than not certain views become prominent and widely accepted as the best ones. Is this because it is inevitable that by using the collective knowledge of the group, everyone will arrive at the best possible solutions? Or is there something else at play?

‘Social proof’ is the term given to the phenomenon where individuals in large groups look at the actions of others in order to gauge the correct behaviour or course of action in any given situation. It is said to be common in situations where there is a lot of uncertainty - both within the individual and amongst the group. The result of this phenomenon can lead to large groups of people quickly forming a consensus that may in fact be mistaken. The individuals within the groups may not actually possess much new information, despite the rational move to gather information from others in order to make an informed decision.

An even more problematic consequence of this is the acceptance of this consensus by individuals due to the belief that those conforming to this consensus are in fact correct. This can lead to individuals arguing in favour of the consensus without gathering and fully examining all of the available information. Of course, more credit is given to ideas with multiple sources and the problem snowballs. This can in part explain the concept of herd behaviour and the perceived fickle nature of many posters. Despite the best of intentions, many fall for this error in judgement.

Browsing electronic pages full of FPL related discussion shortly after a round of fixtures, you will no doubt see this phenomenon for yourself - people discussing their latest knee-jerk reactions to the latest result; bandwagons forming for certain players to be transferred in; campaigns starting for certain players to be transferred out. Despite most people not having had chance to gather, review and reflect upon all of the information available, consensuses are formed. The pressures of missed points, mini-league places squandered and the inevitable price changes of the players in question only add to the panic.

This phenomenon isn’t limited to the initial time after the fixture however. Those who don’t have chance to gather information earlier log in during the build-up to the next deadline in order to discuss transfers, captaincy choices and team selection. Potentially uninformed consensuses that have long been formed are reinforced as the debate rages on all the way up to the deadline. Rumours about team selection and fitness become set in stone. Bandwagons continue to roll while campaigns for the sale of other players power on. Certain players become elevated to god-like status while others become unfashionable and consensuses on captaincy choices solidify amongst the ambiguity.

This phenomenon is even more problematic when you consider that, in the case of FPL, the consensuses are often formed on the perceived actions and behaviour of others. Although someone may seem to be utterly convinced as to one course of action, they may not actually follow it themselves and are merely adding to the fervour.

It is clear that not all consensuses reached are incorrect or are not based on any significant information or knowledge. It’s entirely common for people to carefully consider all of the information available to them, discuss with others and then form a consensuses based on the best possible information available. One conclusion that can be taken from this however is that the consensus of the group may not be the best course of action, especially when there is a large element of uncertainty. Do your own research, seek new information from others and make your own informed decision. After all, it’s your team and you’ll only be more frustrated if you follow the consensus and it goes wrong!


Further reading:

*Dobelli, R. (2011) Die Kunst des klaren Denkens ('The Art of Clear Thinking'). Munich: Carl Hanser 

This article is the latest in a series called "The Art of Clear Thinking" which looks at various errors in reasoning that cause many of us to come to illogical conclusions which may in turn lead to bad decision making. I hope to enlighten and entertain in equal measure and who knows - it may even help you to improve as an FPL player!

Tuesday 28 August 2012

The Art of Clear Thinking - It's only a game!

I recently came across a fascinating book called The Art of Clear Thinking by Rolf Dobelli*, which looks at various errors in reasoning that cause many of us to come to illogical conclusions which may in turn lead to bad decision making.

As I read this, it struck me how applicable this is to the FPL. We spend hours pondering questions such as "who will score the most points this week/month/season?", "what will my next transfer(s) be?" and "who should I have as my captain?". How clearly are we really thinking? Are we making errors in our reasoning?

I would like to share some of these typical errors with you in a series of posts on the topic of 'The Art of Clear Thinking'. I hope to enlighten and entertain in equal measure and who knows - it may even help you to improve as an FPL player! Here is the first of the series:

It's only a game!

It's Saturday morning and there are still decisions to be made for your fantasy football team. You've been contemplating changes all week and have been watching highlights, analysing various players' and teams' statistics, trawling the internet for relevant information and discussing your findings with those who share your obsession with football, all in the hope of gaining some extra insight.

However you still can't decide. You still don't know whether to transfer that player out, who you should transfer in, which player you should captain this week and which players you should bench. After sweating over it all the way up to the deadline, you finally make your decisions, hit that 'confirm' button and hope for the best.

I think we all know where this is heading; Sunday evening comes round and it turns out you made all the wrong decisions and your team did terribly! How could it go so wrong? The player you transferred in and made captain didn't even start the game, whereas the player who made way picked up a tidy double figure return. By the time your captain even came on, his team were winning comfortably and there was no need to push for goals, leading to a frustrating thirty minutes of football for the fantasy manager. Even the players on your bench did fantastically. In fact, they almost outscored your whole team! But it was obvious when you look back at it.

I'm sure you can recall many an example when you've done something similar, only to look back and ask why you made the decision you did when the outcome seems so obvious. Our old friend 'hindsight', a.k.a the 'knew-it-all-along effect' or 'creeping determinism', the phenomenon where events that have already occurred seem far more predictable now than they actually were at the time of making. Looking back, the player you transferred out always looked as though he would do well. However, in reality, you thought they would do terribly as they seemed unfit, out of form or you simply didn't fancy them. As for your bench, the supposedly tougher opposition were in truth dire, but you knew it all along! Why didn't you just play them in place of any of your players who struggled to even pick up the customary two points for simply turning up? In reality, the way you remember thinking and what you actually thought are not entirely the same - a feature of hindsight. In reality, you thought you knew better and were reasonably happy with the decision you had made, at least until ten minutes into the game when it all started to go wrong.

Thinking about it further, your non-starting captain was always going to be rested for the Champions League game three days later. What were you thinking taking such a risk? It turns out that we are likely to judge a risky decision less favourably if, after we know the outcome, it turns out to have been a bad one (something which is known as 'the outcome bias'). But don't kick yourself! It was a calculated risk and one which didn't pay off. Who's to say it won't next time?

Perhaps after all your were just unlucky. You did everything you could and it was just unfortunate that the player you parted company with waited until this game to come good, despite the mediocre performances over the last few weeks. That first goal for example, he looked offside from the replays. Plus, he'd never have had that penalty for the second goal had the referee been close enough to see that the foul was just outside the box. This is a good example of the 'self-serving bias', where you blame your failure on factors out of your control. The flip side of this theory is of course that when things go your way, it's all down to your expert knowledge and hours spent digging up statistics on players' performances. That smug feeling you get after a successful gameweek is well-deserved, whereas the week where you slip down the rankings in your mini-league feels entirely due to factors out of our control.

The key thing to take from all this is that no matter how much time you invest in trying to gain an edge over your rivals, the reality is that it's partially, if not mostly, down to luck (or at least 'randomness'). So chin up, it's only a game! There's always next gameweek after all.


Further Reading:

http://en.wikipedia.org/wiki/Hindsight
http://en.wikipedia.org/wiki/Outcome_bias
http://en.wikipedia.org/wiki/Self_serving_bias
*Dobelli, R. (2011) Die Kunst des klaren Denkens ('The Art of Clear Thinking'). Munich: Carl Hanser

Friday 24 August 2012

Welcome to 'Fantasy Premier League Musings'

Welcome to my blog! I'm glad that you came. Please, make yourself at home.

I started this blog as a place to share my musings, analysis, opinions, insight and ramblings regarding the phenomenon that is Fantasy Premier League (FPL). I'm a relatively seasoned player and regular poster on various football sites and forums under the alias 'thetinkerman'. I hope to offer a slightly different perspective on FPL and the discussion and conjecture that accompanies it. Check out my various posts and feel free to join in the discussion by leaving a comment!