Bales: How to Overcome & Exploit Bandwagon Effect in Betting & Fantasy Sports
Charles LeClaire-USA TODAY Sports. Pictured: Tom Brady
- Jonathan Bales has written the best-selling fantasy sports and DFS book series of all time, probably.
- Heading into the NFL season, Bales will publish excerpts from his books on cognitive biases.
- Bandwagon Effect (the tendency to do things because other people do the same) plagues many sports speculators.
Way back when I was in my prime — before all the
sex and drugs blogging and data collection — I wrote some books. The Fantasy Sports for Smart People collection is the best-selling fantasy sports and DFS book series of all time. Is that actually true? I don’t know. And if I don’t know, you don’t know, which means I can just say it.
I have maybe a million words of content that I wrote in such a way that it mostly holds the same value now as it did when I first put fingertips to keyboard. No guarantees on the actual quality — just that it’s about the same.
I’ve always been interested in public psychology and how it affects our perception and the ways in which we process information — and, more specifically, how to exploit inefficiencies in the ways people think to make real American doll-hairs. So I’m going to post some excerpts from my books — mostly centered around cognitive biases — that I think should be useful for both fantasy sports players and bettors heading into NFL season.
Without further ado, The Jonathan Bales List of Psychological Biases to Avoid for Grown-ups That Can’t Gamble Good and Want to Do Other Things Good Too . . .
The tendency to do (or believe) things because many other people do (or believe) the same; related to groupthink and herd behavior
The bandwagon effect is really interesting because there’s some evidence that a well-formulated “wisdom of the crowd” approach to sports speculation (one in which you aggregate the independent opinions/projections of experts) can lead to success. All else equal, the consensus opinion of experts/pros will outperform the majority of pros’ opinions taken in isolation by factoring out individual biases.
There are a few potential problems and limitations with a wisdom of the crowd methodology, though. The first is that it’s a lot of work to find true experts, especially in football. Even if you track their predictions, football is so volatile that it can take years to determine with any degree of certainty who is actually an expert and who isn’t.
Second, there’s a timing issue. It’s not realistic to get everyone’s opinion on a backup running back who has been thrust into the starting lineup because of a late 12:30 p.m. ET scratch.
And, finally, their opinions need to come independently of one another, which is often not the case, especially in a sport like football with so much groupthink. Because there’s so much time between games, there’s an entire week for media, fans and fantasy players to create narratives, some of which might be true, but many of which are not. It can be very difficult to hold firm to opinions you have on Tuesday by the time Sunday rolls around simply because it’s so easy to follow the herd; it’s so natural to say, “Well, all these people like this guy, so I probably should too.”
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How to Overcome/Exploit It
One of the ways I try to overcome the stranglehold of the bandwagon effect is to write down my predictions/thoughts in the beginning of the week. In addition to the predictions I make, I create a list of players I naturally like before doing any other research — no data, no news, no expert analysis, nothing.
This is a pretty straightforward way of being contrarian, and some of my favorite thoughts on thinking outside-the-box come from Peter Thiel in “Zero to One.”
The way I read books is probably a little bit different than other people because 1) I’m a bizarre individual and 2) I try to relate everything I read to daily fantasy sports and betting (or whatever else I’m interested in at the time). I read a lot of philosophy, theoretical physics, books on investing — whatever, it doesn’t matter — and I always try to apply anything I’ve learned to a different field.
That’s how I (kind of) brought antifragility to daily fantasy sports. In reality, lots of players were using this approach before me. I just sort of stole someone else’s term and applied it to DFS (and, really, Shawn Siegele was the first person I know to bring it to fantasy sports).
A lot of the world’s best ideas haven’t really been unique at all; they’ve just combined concepts from seemingly unrelated areas. James Altucher talks about this quite a bit, and he calls it “idea sex.”
I once did an experiment with a group of people. Write down 10 titles of books you would like to write. Now turn to your partner. Make a list of 10 books combining the titles.
I asked for some examples. I loved all the results. For instance, a “How to Make Toast in Space” or “A History of Music as Told by the Instruments of the greatest performers.” And so on.
The fastest way to generate themes and ideas is to take two different areas and combine them.
The fastest way to master any area of life, is to become good at two or more areas, intersect them in a unique way, and now you are the best in the world at the intersection.
If you look at every great achievement in history, idea sex was the impregnation of that achievement.
I really like this idea. When you take a concept from one field and apply it to another, you’re forced to think in a creative, outside-the-box sort of way. Maybe I’m just trying to justify why I write about philosophy in books about fantasy sports, I don’t know. Or maybe I’m a genius. You tell me.
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Anyway, back to “Zero to One.” I came across this quotation from Thiel that I thought was really applicable to DFS:
How much of what you know about business is shaped by mistaken reactions to past mistakes? The most contrarian thing of all is not to oppose the crowd, but to think for yourself.
I think there are two fundamental ways to be contrarian. I’ve typically utilized one more than the other, which is trying to predict public opinion, figuring out where the crowd might be wrong and how I can potentially benefit from that.
That means I’ve spent a whole lot of time projecting ownership percentages in tournaments. And I do think there’s a massive amount of value in that. If I have two players rated equally but I believe one is going to be in 30% of lineups and the other in 10%, I’m going to side with the latter player every time.
The concept of antifragility is more or less based on opposing the crowd. How can I put myself in a position to capitalize if others are wrong or things just don’t work out in their favor? This approach is macro-to-micro, in a way, because I’m mostly concerned about how the market will react, first and foremost.
The other way to be contrarian — the one I think Thiel would argue is the “most” contrarian strategy of all — is to ignore what the market is saying before doing anything. Don’t listen to analysts. Don’t listen to experts. Don’t listen to beat writers. Certainly don’t listen to me. I’m a complete doofus and still totally floored you guys read my books.
Screw whatever I or anyone else says and form your own opinions before looking at any sort of analysis. I think this has value for a variety of reasons, the most obvious being that you’re able to create your shortlist of targets or games to play with as little outside influence as possible. Really think about each matchup.
Keep that list of players/games tucked away. Put it under your pillow. Sleep with it. Secret of the pros — something all the profitable DFS players and bettors are doing that no one knows about.
Or you can just write down the players in Word or Excel. Your choice.
When you evaluate players without any sort of outside influence — or as little as possible — I think you’ll find you will naturally have a lot of contrarian elements. You aren’t going to agree with the crowd all the time, and certainly not as much as after you wait for the public to shape your views on players, even subconsciously.
This is almost a Taoist path to contrarian play — being contrarian without really being contrarian. The path of least resistance — the “Un-Contrarian Contrarian.”
There’s certainly a skill to this — the ability to make smart subjective decisions using your “gut” — and it’s one I hope to help you cultivate. I have no problem using instincts in this way, as long as the process is aided and even governed by analytics. In many ways, I think the biggest benefits of being a data-driven speculator — especially in football — are that the process encourages a way of thinking, testing, falsifying and adapting that naturally aids your subjective decision-making, i.e. building models and analyzing data help you make better decisions even when you think you aren’t being analytical at all.
Near the end of the week, revisit your “gut list.” If you still like a player after all your research — assessing injuries, taking in news, analyzing a model, and so on — chances are he’s a decent play. For the inconsistencies — players or games you no longer like as much or those the data suggests are values but you didn’t initially list — focus on the reasoning behind each discrepancy to figure out where you’re having trouble.
And remember: The key is having sex (figuratively, maybe) with a piece of paper.