What are Heuristics?
Ever heard of heuristics? It might look a bit complicated initially, but heuristics are nothing more than your habits and instincts. It's something that we rely on as human beings to survive. However, relying on heuristics might not be the best choice in sports betting. Let's find out the reason.
Our brains process and respond to multiple problems every day. Whether it's larger or more minor problems, it might be overwhelming to consider the sheer size of the intricate issues we need to face and solve with quick solutions.
This is why the brain needs to develop reliable shortcuts so we can keep up with the environment we inhabit. This efficient problem-solving technique is known as heuristics.
Heuristics as a Cognitive Framework
Heuristics is the general cognitive framework we rely on constantly to find a solution quickly. For example, if you're planning to take on a specific study at a university, your intuition will likely revolve around a path that's most satisfying, interesting and often practical.
A student may also reflect on their strengths and weaknesses during their past studies in high school and base their decisions based on their interests.
It's crucial to remember that all these heuristics generally apply to our everyday problems, which helps us make satisfying solutions and simplify complicated mental tasks.
Before we look at the effects of heuristics in sports betting, let's just say that they are actually good traits that we all possess and result from billions of years of evolution. As our distant ancestors who developed this quick-fire mechanism through constant challenges and failures, we can now enjoy the effective and helpful parts in extreme situations. Having these heuristic traits in our genes is a blessing and has proven to help us in certain times. However, should we rely on them at all times?
5 Most Common Heuristics in Sports Betting
As we talk about heuristics, we should remember that there are many of them. Here, we'll be looking at the most common ones among bettors.
1. Anchoring
This is one of the biggest tricks used in the marketing and bookmaking industry as well. Anchoring is a heuristic that affects our ability to estimate the most likely value from a group or sequence of items.
For example, imagine if someone asks you to guess the number of total goals, there will be in a particular football match. Your brain will instantly start making some numbers based on your knowledge of the teams to come up with a number that seems realistic. Next, they'll give you a random number and you'll need to decide if the number of goals will be above or below this random number.
Now, you need to make your guess about the total number of goals. Remember that the number they'll give you is entirely random. However, if you're a new bettor, you'll still likely adjust your final guess to the anchor even though taken out of the blue.
This phenomenon occurs due to our brain's hidden automatic assumption that the anchor works as the type of starting point, which is something we aren't comfortable moving far from. As we've mentioned at the start of the paragraph, the mainstream media and various industries highly exploits anchoring, and betting is no exception. A clear example of anchoring used in sports betting are handicaps, spreads and even wording. Stay away from these and keep yourself on the right path.
2. Availability Bias
Just like multiple other biases, availability is the one that lurks on us, not only in sports betting. There are many other examples of how people exploit this phenomenon daily. Availability biases are mainly our human tendency to stick to events with bigger emotional bounds or something more memorable. Because of this reason, we usually overestimate the chances of extreme events that are actually happening.
An excellent example of availability bias is in insurance companies. These businesses tend to raise their insurance premiums for specific extreme events after their occurrence, even if the chances of them being significantly lowered.
In sports, what's the last football game result that comes into your mind instantly within 5 seconds? We doubt it will be a 0:0 World Cup Playoff match or a clash at the Champions League with a similar score line. Instead, you'll likely think of a high-scoring match that will pop up in your head, regardless of how important it is.
In sports betting, players like to overestimate the chances of important events (such as red cards, penalties and corners) happening more frequently. The only reason is that they're more memorable and easier to recall. This behaviour dramatically affects bettors' perception of the chances and leads to an ineffective betting style. This subject also links to bettors who tend to bet more on the Over side of the Totals market as they believe the market has a bigger probability.
3. Diversification Bias
We all have heard the famous investor quote: "don't put all your eggs in one basket." This is indeed true, but there is one small heuristic that you might not be familiar with.
The problem with diversity hides once more in how we decide the possible options when we need to make them simultaneously instead of sequentially. An easy example is in a situation when you need to make more diverse decisions when you receive many kinds of options at once.
Unfortunately, this heuristic is pretty common in sports betting, as the more diverse our selection is, the more we usually stake on it, no matter the value behind each selection. Let's use the regular 1X2 football market as an example, where bettors usually stake more on X2 or 1X selection instead of single ones like 2, Z or 1. The heuristic is a big threat for bettors as it eliminates the logical reasoning behind your betting decision. Just remember to place your bets based on expected value and assess your risk sensibly.
4. Overcommitting
As problematic as it seems, overcommitting is one major heuristic that can negatively affect your betting. Humans are known to eagerly justify their commitment by raising their investment even though the costs may outweigh the benefits.
Try looking at a movie theatre where you bought a ticket to a blockbuster movie, and it ended up horrible. However, you don't leave the cinema halfway and stay until the movie ends because you've already invested your money, time and effort into watching the film. Therefore, you try to justify your investment.
A betting equivalent to this example is placing a longshot bet and sticking to it despite the high chance of incurring costs instead of cashing out and taking smaller losses. In these situations, bettors usually demonstrate irrational behaviours by blindly sticking to their original (wrong) decision instead of a less risky approach.
5. Representatives and Sequences
The final but not the least common heuristic is how we tend to look at the relationship between different events or smaller event sequences. And believe that they are part of bigger sequences even though it's entirely independent.
An example of heuristics is known as the Gambler's Fallacy. You might have already heard about it, but if you haven't, it's something that dates back to 1913 in a Monte Carlo casino. This is why it also got its other name Monte Carlo Fallacy. During the time, the casino saw backup come up 26 times for the first time in a row on a roulette table. That's right, 26 times! Visitors who played at the time began to blindly stake on red after the fifteenth black, as they thought the probability of getting another black was extremely high.
This is the perfect example of how people can miscomprehend probabilities and the natural law of chances, as people believe every event (spin) may affect the next. This belief, or should we say, misbelief, is highly irrational. In reality, every event is entirely independent and is a pure gamble in the case of casinos.
There are examples of this fallacy in sports betting, known as the Hot Hand Fallacy. Basically, it's when you believe in bad and good luck streaks. So, whenever we experience back-to-back events with the same outcome (like football teams winning a series of games), we usually refer to them as highly significant. This creates a fallacy in every subsequent entry and is affected by the previous one as a default.
The Hot Hand Fallacy appeared during a study in the 1980s where researchers suggested that basketball players who made a shot have an increased likelihood of making the next shots consecutively. This idea became famous worldwide because it sticks to basketball and is still being paid attention to this day.
Conclusion of Heuristics Effects on Sports Betting
The list above is considered to be the most common heuristic that bettors face and are falling for every time. However, there are many more out there.
To become successful at betting, remember to think rationally, find value and assist the risks you're taking properly. Also, choose your head instead of your gut feeling. This is why as a sports bettor, you should focus on the importance of learning the essentials and betting responsibly and wisely.
