Don’t bank on ‘wisdom of crowds’ to win bets in football matchesBy ANI
Tuesday, November 16, 2010
WASHINGTON - A new study questions whether it’s a good idea to follow ‘the “wisdom of crowds’ while betting on, say, a team’s win in a football match.
Point spreads-the number of points by which a strong team can be expected to defeat a weaker team-are supposed to reflect the ‘wisdom of crowds’ - but the new study has claimed that crowds don’t have a clue.
“Point spread betting markets seem to offer an important example of crowd wisdom, because point spreads are very accurate and are widely believed to reflect the ‘crowd’s’ prediction of upcoming sporting events,” said authors Joseph P. Simmons (Yale University), Leif D. Nelson (University of California at Berkeley), Jeff Galak (Carnegie Mellon University), and Shane Frederick (Yale University).
The authors conducted a season-long investigation of the betting habits of enthusiastic NFL football fans from diverse regions of the United States.
Participants wagered more than 20,000 dollars on football games against point spreads that were manipulated to favour the underdog.
The bettors failed the test, predicting vastly more favourites (89 percent) than underdogs. And even when bettors were warned that the spreads had been increased they still predicted favourites only slightly less often (83 percent).
“In this context, the temptation to rely on one’s intuition is so strong as to lead people to rely on what they intuitively feel to be true (this favourite will prevail against the spread) rather than on what they generally know to be true (the favourite will usually lose against the spread)” the authors wrote.
Interestingly, people have trouble learning from their mistakes: the crowd’s predictions worsened over time, rather than getting better.
Finally, the researchers hit upon a method of eliciting better choices.
“Asking people to predict point differentials rather than make choices against point spreads decreased reliance on faulty intuitions and produced vastly different, and vastly wiser, predictions against the spread,” the authors conclude.
The study is published in the Journal of Consumer Research. (ANI)