I’m not an avid reader of the Racing Post, and don’t follow weekly horse racing meets. In fact I will usually quickly switch channel if I happen upon racing coverage. However, every year for the Grand National I’ll always end up putting a bet on, and getting swept up in the excitement of the race.
(Sidenote: The reason for this is probably because everyone else is doing it and I unthinkingly start following the social norm but that’s another story.)
The process most people go through when betting on the National, or other one-off horse races, is a good analogy for how we all make decisions on a daily basis without really being aware of it.
When you look at the pullout listing the runners and riders you are faced with a difficult decision. Which horse and rider represents the best chance of winning or placing? There are many factors that could contribute; experience, form, conditions, physical characteristics, temperament, etc.
You could rely on the odds provided by bookmakers as a summary of these, but the odds change by the minute and can vary massively.
Once you’ve assigned probability there is then task of assessing the potential return on your stake and balancing the risk/ reward of a ‘safe bet’ versus one with the potential for a ‘big win’.
Answer an easier question
There are a number of different strategies that people may take to help them make this decision, and interestingly these closely match the automatic decision making process that we undertake on a daily basis, from decisions such as choosing what to eat in a restaurant, to rating our own happiness or making investment decisions.
As Daniel Kahneman says: “When faced with a difficult question, we often answer an easier one instead, usually without noticing the substitution”.
You can recognise this when thinking about how you bet on a horse race. Because it is so far out of comfort zone, you might pick one or two of the easier questions and make your decision based on this. However do you realise you also do this everyday from routine decisions to big life changing ones?
The following are 4 examples of the type of easier question you might ask your self:
“What colours do I like the best?”
When faced with choosing a horse from 40 what do most people do? Many will simply pick based on the colour of the silks or a name that stands out to them.
Whilst most people will admit to picking based on arbitrary criteria such as colour or name when betting, most would be surprised that this applies just as much to every day decisions.
A German experiment asked people ‘How many dates did you go on last month?’ and then ‘How happy are you these days?’
The answers were directly correlated when asked in this order. But when decoupled there was no correlation.
This experiment demonstrates the brain’s deferral to System 1 (See Thinking, Fast and Slow). When faced with the question (How many dates…’?), followed by a subjective one (How happy are you…?), people often simply carry over their answer from the first to the second.
Complicated questions such as ‘Would this politician be a Prime Minister?’ can become “Do I like them?” or “Do I trust them?”.
2. Do what others are doing
“Who are most other people picking?”
We innately follow what other people are doing. Betting odds represent not only the perceived chance of winning but are also how many people are betting on a horse.
As it gets closer to the start and the favourites odds are dropping, you might take this as a sign that lots of others know something you don’t, so better follow the crowd.
Nothing significantly changes in those couple of hours before the start. The experience, form, physical characteristics etc are unchanged, however odds can vary massively based on people following others.
In everyday life we are influenced by what others do, more than we are aware. In a restaurant you are sometimes faced with a difficult decision on an unfamiliar menu. So you might be influenced by what other people order or what you see other tables ordering. “I’ll have what he’s having…”
Amazon, Tesco, Tripadvisor and most major companies use this frequently. You’ll often see products tagged as ‘Bestseller’ or ‘Most Popular’.
50 Shades of Gray is widely agreed to be a fairly average quality piece of literature. However its sales exploded because for a short period of time it seemed that everyone was reading it so it encouraged more and more people to follow suit.
3. Outsource decision making
“Who is an ‘expert’ picking?”
When decisions are difficult or ambiguous we often decide to outsource our decision making removing the burden (and future blame!) from ourselves.
In horse racing we might defer to bookmakers odds alone and decide based on that, or follow the top tips from racing ‘experts’.
Tips for Grand National already posted. Others today: Rock On Ruby, Dan Breen, Peddlars Cross, Just Smudge e/w in 3.25 at 50-1. Good luck
— Clare Balding (@clarebalding) April 9, 2011
In everyday life we look to others who have made a similar decision or take ‘expert’ guidance or endorsement into account when making a decision. For ‘expert’ you can read ‘celebrity’ in many situations.
4. What comes to mind most easily
“Do I recall any of the names easily?”
If you recognise the name of a horse (even if you’re not sure where from) you are probably more likely to pick it. This is the availability heuristic. A mental shortcut that relies on immediate examples that come to mind. The availability heuristic operates on the notion that if something can be recalled, it must be important.
Everyday judgements on how risky something is are massively influenced by how easily you can think of examples of it happening. Media coverage of a dramatic incident such as a plane crash increases how risky people think flying is. When surveyed in 1978 people thought that more people were killed by tornadoes than asthma, in actual fact it’s 20 times higher for asthma.
If you pick your horse in a sweepstake you are probably happier
Whilst you might think you would be happier to have chosen your own horse than assigned one randomly,you’ll probably end up happier if you have no choice.
Pick a dud from a sweepstake and it’s just bad luck, if you put effort into choosing a horse yourself, you are opening yourself up to buyers regret ‘Damnit! I was thinking about betting on Ballabriggs!’
As for this years race… I’m going for Colbert Station (as in Stephen) and maybe Twirling Magnet (for the stars).