Sudden-Death Aversion

In this weekend’s New York Times Sunday Review, some good friends of the Behavioral Scientist wrote an op-ed on sudden-death aversion—the bias that leads people to try to minimize the chances of an immediate loss, even at the expense of their overall odds.

The op-ed coincided with the Super Bowl (congratulations to the Philadelphia Eagles, and good luck to Philly E.R.s) because the research relied in part on 10 years of NFL data to make its case (along with data from the NBA). The research showed that we are often myopic and focus on dealing with immediate concerns, even when it undermines our success in the long run. This insight is much broader than sports. But there are good reasons to study it in the professional sports context.

For one thing, the people involved care a tremendous amount about the outcome and there are large sums of money on the line, so the stakes are significant. When people make mistakes in judgment it’s not because they don’t care enough to get the right answer. Sports are also unique in that, unlike in many other aspects of life, the same situations arise over and over again, which makes them much easier to study in a systematic way. In other words, we can calculate which strategy is most likely to be successful in a given situation and compare that to the choices that coaches actually make.

This points to the broader organizational context as critical in supporting rational behavior.

One other interesting point that didn’t make into the final article (although it’s discussed in the academic publication) is worth noting. Even if coaches could fully correct for their sudden-death aversion and were fully on-board with the logic of going for two points to win the game despite the risk of immediately losing, it’s not entirely clear it would be wise of them to do it. At least not as long as everyone else continued to harbor the bias. Tying the game and losing in overtime is rarely going to be blamed on the coach, absent some other misstep; losing as time expires on a failed (and optional) attempt to win it—that could get you fired. This points to the broader organizational context as critical in supporting rational behavior. Doug Pederson, the Eagles’ head coach, appears to be on the vanguard of NFL coaches who will let data overrule intuition, but it certainly helps that the entire organization has his back when things don’t work out. Luckily for the Eagles, yesterday they did.

Disclosure: Dave Nussbaum served as an advisor to the authors of The New York Times op-ed. Richard Thaler, one of the  authors of the op-ed is an advisor to the Behavioral Scientist.