What should you do when you narrowly fail to achieve an important goal? Humans have a tendency to want to do something to attempt to fix what went wrong, but the harsh fact of the matter is that sometimes you simply get unlucky. In cases like these, it might be better not to radically adjust your strategy, because good strategy and good outcomes aren’t always as tightly connected as we might like them to be. A new paper in Management Science highlights our tendency to overreact to narrow losses that may be beyond our control by examining a very specialized profession: NBA coaching.
The paper focuses on a phenomenon called outcome bias — the tendency to pay too much attention to whether or not a given action worked, even when the outcome may not have gone our way for reasons beyond our control. “One can easily misinterpret a favorable outcome as justification for a given strategy, overriding more subtle evidence to the contrary,” the researchers write.
The researchers decided to examine the impact of outcome bias on NBA coaching decisions and performance. Basketball is a pretty good venue for this sort of investigation because it involves a fair amount of statistical noise: If a few random bounces don’t go your way, what would have been a three-point win instead becomes a three-point loss.
Sure enough, they found that “coaches tend to change their strategy more frequently after losing a game than after winning … even when comparing narrow losses or victories, where winning contains no information regarding the quality of team play.” In other words, in a situation where, say, you lose to a team about as talented as yours because that team shoots free throws at 95 percent instead of its usual 70 percent, it might be the case that you simply got unlucky. And yet coaches, beset by outcome bias, tend to be more likely to jigger around their starting lineups in the wakes of these losses, and these overreactions lead to small but measurable decreases in the number of wins they’re able to accrue.
Just because most of us aren’t NBA coaches doesn’t mean there aren’t lessons here for everyday life. We aren’t always good at separating what is and isn’t in our control (there’s a prayer for that), so in the wake of a setback, we might be tempted to head to the drawing board in unnecessary ways.
“The good news is that when the outcome isn’t close, our brains are pretty good at getting the right message,” said Brennan Platt, one of the study’s co-authors, in an email. “We interpret big wins as strong evidence that we are doing the right thing, and big losses as evidence that its time to shake things up.”
It’s when we just barely win or lose that outcome bias is more likely to kick in, he explained. “The errors arise with narrow outcomes — we act as though we ‘should have known’ that what did happen would happen, so we give ourselves too much credit for the narrow win, and beat ourselves up too much for barely coming up short.”
He concluded:
The takeaway, then, is to beware your gut reaction after those narrow losses or wins. Random luck matters most when the outcome hinges on only a couple points, so don’t be too quick to blame the loss entirely on your choices. Our emotions from the thrill of victory or the agony of defeat can skew the evaluation of what just happened, but those close calls are precisely when we need to be more dispassionate and analytic, examining all the evidence rather than just the W or the L.
Don’t trust your gut, in other words — it’s too easily influenced by that spazzy brain of yours.
