Do Better Known Teams Win More Often? The wisdom of ignorant crowds: Predicting sport outcomes by mere recognition

Abstract (Via Stephan Herzog & Ralph Hertwig)

The collective recognition heuristic is a simple forecasting heuristic that bets on the fact that people’s recognition knowledge of names is a proxy for their competitiveness: In sports, it predicts that the better-known team or player wins a game. We present two studies on the predictive power of recognition in forecasting soccer games (World Cup 2006 and UEFA Euro 2008) and analyze previously published results. The performance of the collective recognition heuristic is compared to two benchmarks: predictions based on official rankings and aggregated betting odds. Across three soccer and two tennis tournaments, the predictions based on recognition performed similar to those based on rankings; when compared with betting odds, the heuristic fared reasonably well. Forecasts based on rankings—but not on betting odds— were improved by incorporating collective recognition information. We discuss the use of recognition for forecasting in sports and conclude that aggregating across individual ignorance spawns collective wisdom.

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12. February 2011 by Miguel Barbosa
Categories: Behavioral Economics, Curated Readings | Leave a comment

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