In today’s class we focus on the realities of decision making. In Classes 4 and 5 we discussed advanced statistics for player evaluation and decision support for choices of in-game tactics. But, sports decisions are made by executives rather than by computer programs. Today we discuss the relationship between statistical models and human decision makers.
With business school students and the segment of people that are listening to a podcast on sports and fan analytic, there is probably a good deal of confidence in the value of using statistical models and data to make decisions. However, this view is not universal.
I know more math and stats than Charles Barkley. But Charles Barkley knows more basketball than I do. Given this reality how does the business of analytics get done?
The core of the class is a comparison of humans and models. On a simple level, Humans are good at holistic judgements but suffer from cognitive biases. In contrast, statistical models are unbiased but have limited explanatory ability.
The discussion then moves into the topic of cognitive biases. This is well developed area of study. It is also a bit chaotic as researchers have identified many different biases. For illustrative purposes we discuss two examples: Sunk Cost Fallacy and Availability Bias.
Individuals commit the sunk cost fallacy when they continue a behavior or endeavor as a result of previously invested resources (time, money or effort) (Arkes & Blumer, 1985). The availability bias is the human tendency to think that examples of things that come readily to mind are more representative than is actually the case.
We finish the class with some statistical results from some work I did with the WNBA's Atlanta Dream a few years ago.
In the next class we shift back to the business side of the equation and talk about brand equity. Or as I like to call it “Fan Equity”. In terms of preparation, think about the top and bottom teams in any league. Not in terms of some version of a current Power Ranking but in terms of what teams are considered the iconic teams of the league.
Listen to Class 6 here:
The full class is streaming on Apple Podcasts, Spotify, and Stitcher.