betting bias - how bookmakers make money because of our cognitive biases 2 –the bandwagon effect
A betting bias has its roots in the field of cognitive psychology. As you now should be aware of, there are a number of psychological aspects that gamblers need to be aware of if they are looking to be successful. Critical thinking, left brain analysis and in general good judgment are essential tools to have in the shed. Unfortunately there are a number of mind states that people subconsciously get into that negatively affects their choices.
What is the bandwagon effect?
This bias is believed to be based on how we as humans prefer to be comfortable and avoid any and all social pressure when groupthink is on the agenda. When a new fad diet hits the market people may jump on “the bandwagon” and more and more disciples are created until the bubble bursts. When a new technology or product bursts onto the scene such as the internet did in the last half of the 1990’s investors go bonkers and groupthink their way to financial disaster. Everyone seems to take the groupthink conclusion in with their right brain rather than letting the more analytical left brain consider the fundamental facts. Investors did not want to be caught holding boring industrial stock while the neighbor was raking in the cash on a sexy internet startup. Clearly, being controlled by the fear of being wrong rather than analyzing carefully and make a decision on the findings doesn’t strike anyone as particularly clever does it? Yet, we see this phenomenon over and over again in many different settings and sectors of society. Can you profit on it? Indeed you can. Just ask George Soros, the Hungarian born master trader and investor. His book the alchemy of finance touches on this and is a great read for those interested.
How does the bandwagon effect relate to betting?
So, how does this become a betting bias? How many times haven’t you analyzed a game, or a handful of games to pieces, proudly patting yourself on the back for the hard work and deep thought that went into the effort only to read an online betting forum or browse a betting site giving bet tips that there are numerous people ready to take the opposite side of your bet? We bet that this has happened to you a lot. Surely it has to us. Unless you are cool, calm and collected, this can result in not making the wager, or worse switching sides. It may have taken you hours and hours of left brain activity just to let five minutes of right brain information scanning ruin it all. Clearly, this is not the correct approach.
Betting bias - more likely when high profile games are on their way
This is especially a common occurrence when you look at high profile games. Take the Super Bowl, the Champions League final, or NCAA football bowl games as examples. They have it in common that they gain a lot of public interest. The newswires, posting boards and office water cooler discussions go into overdrive. Often times the popular team or the team that is highly profiled ends up being the big favorite. These aspects can actually move the betting lines quite dramatically. Odds will move as the popularity of a side or total increases or decreases.
Superbowl betting bias example
The bandwagon effect has perhaps never been clearer than in the 2008 Super Bowl. In this game the New York Giants were playing against the New England Patriots. In the regular season the Pats stormed to the playoffs. The Giants held their own and played well in the playoffs to get to the big game. When the lines opened the Pats were 9-10 point favorites. Then the media and forum hype of all kinds inspired people to have a bet on. The Pats line quickly moved to 12. Books were now dying for money on the Giants. More and more people piled on the Pats bandwagon as the bettors took in all the hype; the ML for the Giants closed around +400. This provided the dog backers with a hefty 4-1 return on their money. It is the Super Bowl you must remember, it is highly competitive. In the end the Giants made a remarkable comeback and won the game 17-14. The bandwagon broke all four wheels and the sports books celebrated with champagne one more time.
Those bettors that were piling on the Pat's may have entered the race as a cause of the bandwagon effect. At the same time as the days led up to the game, and even on game day a high number of bets came in on the Giants. Value seeking professionals, and other people who could see through the hype, recognized that the bandwagon effect was playing out and took this huge line for such a high profile game.
Our aim with this article series and our online betting guide type of site is to teach you how to bet using an analytical approach. Let the others feed on the hype that the media and numerous forums etc. can create, trust facts, use your brain. We hope you enjoyed the article. If you did, please do share it with your friends and follow us on your favorite social media site. Also, feel free to browse our bet tips section, where the result of our hopefully bias free labor manifests itself.