Have you ever wondered about the source of “home field advantage” or why officials seem to “swallow their whistle” at times (and why we want them to)? Are you curious about whether coaches generally make statistically supportable decisions or go with conventional wisdom?  A 2011 book, “Scorecasting” by Moskowitz and Wertheim, is a statistician’s dream.  They use mounds of data across multiple sports to investigate hidden biases and psychology that influence athletes’ and officials’ behavior.  It’s an entertaining read, replete with sports examples you may know, and doesn’t bury you with numbers.

Assuming their data is correctly analyzed, they draw some provocative conclusions. The statistically provable advantage to a home team varies by sport from 55% to 67%. This advantage derives not from fan support (directly), familiarity and comfort with the home stadium, or the advantage of the visiting team’s travel weariness, but primarily from judgment calls made by officials favoring the home team.  The more critical the game situation, the more the calls favor the home team.  The data seems irrefutable that officials are not objective; the reason is open to debate. They finger the lure of conformity and the avoidance of stress caused by vocal fan displeasure.

When we convince and sell clients, I wonder if the same principles operate. We attempt to be liked by our customers, and to convict them with tales and data of others who love our product or service (for their benefit, of course). As we align ourselves with clients, we must be careful to not lose objectivity and walk the line between underselling and overselling, under-convincing and over-convincing.

Why is conventional wisdom so hard to resist? One reason is conformity bias; another is confirmation bias. It’s much easier to remember the failed 4^th down attempt than the successful ones.

When an official makes a snap decision, do they lean toward making a penalty call or not? Statistics say and psychology confirms they lean toward not making the call, or in fan parlance, letting the players play.  This is called omission bias.  When the game gets close, officials don’t want to be the ones to decide the game.  It’s easier to avoid abuse by fans, coaches, and media for a bad unmade call than a bad made call.  This is clearly a bias fans have suspected for years, but very difficult to avoid.  More generally, I wonder if in life and business, our biggest errors are failing to act and missing opportunity, rather than taking initiative, acting and making a mistake.  A recent survey of retirees revealed that one of their biggest regrets was not taking more risk.

We fight a form of this in clients afraid to make decisions, as they wait for better rates, more information, or a better time.  Procrastinators experience opportunity costs with excessive checking and savings deposits, or become mired in continual study of options.

Our own Kansas City Chiefs this year seemed to “go for it” on 4^th down a lot this season.  The fans and I generally liked it. However, it is statistically provable that this strategy should be way more prevalent.  One high school team in Texas goes for it on EVERY fourth down, with long-term success evidenced by its state championship appearances.  Studies of voluminous NFL data by a prominent Cal-Berkeley economist show that wherever a team is on the field, they should statistically always go for it with 4^th and 5 yards or less.  Punting or attempting a field goal in these situations yields inferior results.

Assuming you buy the analysis, why is conventional wisdom so hard to resist?  One reason is conformity bias; another is confirmation bias.  It’s much easier to remember the failed 4^th down attempt than the successful ones.  We confirm our preconceived ideas with selective hindsight.  In addition our brains are hard wired with risk avoidance bias.  Tversky and Kahneman have shown that a loss is perceived as multiples of the value of an equal value gain.  So we end up with coaches who would risk their jobs if they were to follow the statistics.

We confront these biases in our sales profession and lives.  It’s taken a decade and a half to emerge from virulent bias against Fixed Indexed Annuities (FIAs) and arrive at the most favorable (or at least a neutral) milieu for indexed annuities.  FIAs have obvious advantages as an asset class, unreplicable with other instruments, with millions of success stories and relatively few complaints.  Why has it taken so long for more big-name insurance companies, regulators and financial media to offer them, fairly deal with them and fairly report on them?  My belief: Conformity bias, Confirmation Bias and Risk Avoidance.

The authors indicate, being human, we may never eradicate psychology that bends our ability to make good, logical, rule-based decisions, but we can improve our abilities through self-awareness.