For most of us, the pain of losing a dollar is far more powerful than the pleasure of winning a dollar. In a frequently cited psychology experiment, subjects are offered two gambles that have identical payoffs but are framed differently. In the first gamble, a coin is flipped, and if it lands heads, you get $100; if tails, you get nothing. In the second gamble you are given $100 first and then flip the coin. If the coin lands heads, you owe nothing; if tails, you pay back the $100. Subjects dislike the second experiment much more than the first even though the actual gains and losses are identical.*
Marketing and advertising execs cater to this bias. Would you rather get a $5 discount or avoid a $5 surcharge? The same change in price framed differently has a significant effect on consumer behavior. A study of insurance policies, for instance, found that consumers switch companies twice as often when their carrier raises rates, as opposed to when the competition decreases its rates by the same amount. In everyday life, loss aversion causes people to make suboptimal choices. Many home owners looking to sell their houses right now would rather keep them on the market for an extra year than drop the price to $5,000 less than they paid, even though keeping the home for an extra year will surely cost them more than $5,000. A study of home sales by two economics professors, David Genesove and Christopher Mayer, then at the University of Pennsylvania’s Wharton School of Business, showed this pattern. Home owners were reluctant to reduce the sale price below what they paid for the house even when continuing to own it meant incurring carrying costs—mortgage, utilities, maintenance—far exceeding the reduction in price needed to sell it. The idea of a loss was just too painful for them. In contrast, home owners facing a gain on a house often sold too early and for too little. The gain didn’t matter as much as long as there wasn’t a loss.
On Wall Street, fear of loss is often behind dubious investment strategies. Mutual fund managers, for example, will hold well-known or recognizable companies instead of obscure companies that are expected to deliver much better performance. The rationale: If you lose money by buying Walmart or Microsoft—recognizable blue chip companies—no one will blame you. You won’t get fired; they’ll chalk it up to “bad luck.” Even though a small, obscure company might be a better bet, on the off chance that it doesn’t pay off, you risk losing the client. So it is that many mutual fund managers will choose good companies over good investments.
On the television reality show The Biggest Loser, obese contestants compete to lose weight. The more they lose, the more they are rewarded. Two Yale professors, Ian Ayres, an expert in contract law, and Dean Karlan, a behavioral economist, were desperate to lose weight. Like the Biggest Loser contestants, they tried to find motivation in rewards. It didn’t work, and so they flipped the Biggest Loser concept around and tried to motivate themselves with loss aversion. They entered a weight-loss bet with each other, and each one committed to pay the other $1,000 a week if he didn’t lose the required weight. In addition, once the weight was lost, it couldn’t be gained back without incurring the $1,000 penalty.
Two years later, neither professor has seen a dime of the other’s money—and they’ve lost almost 80 pounds between them. They launched a company, stickK.com, to help people facilitate personal commitment contracts for weight loss and other personal goals by using loss aversion. If you don’t live up to your end of the contract, they give your money to charity or a designated beneficiary. (In another variation, the losers have to donate the money to a cause that runs counter to their political sensibilities: gun haters contributing to the NRA, pro-lifers contributing to Planned Parenthood.)
This same loss aversion affects coaches. They behave much like the shortsighted mutual fund manager who forgoes long-term gains to avoid short-term losses and the amply girthed professors who could lose weight only when faced with a loss rather than a reward. The coaches are motivated less by potential gain (a touchdown) than by fear of a concrete loss (the relative certainty of points from a field goal).
More broadly, many coaches ultimately are motivated less by the potential of a Super Bowl ring than by the potential loss of something valuable they possess: their job. And in sports, there are few faster ways to lose your employment than by bucking conventional thinking, by trying something radical, and failing. A coach ordering his team to punt on fourth and three—even when it’s statistically inadvisable—faces little backlash. He is the money manager who plays it safe and loses with Walmart. If he goes for it and is unsuccessful, there’s hell to pay. He is then the money manager who loses on that unknown tech stock and now risks losing the entire account.
It makes for an odd dynamic in which the incentives and objectives of coaches aren’t perfectly aligned with those of the owners or the fans. All want to win, but since the owners and fans can’t be fired, they want to win at all cost. Give a coach truth serum and then ask what he’d prefer: go 8–8 and keep your job or go 9–7 and, because of what’s perceived to be your reckless, unconventional play-calling, lose your job?
It’s not just football coaches who make the wrong choices rather than appear extreme. In basketball, for instance, prevailing wisdom dictates that coaches remove a player with five fouls, particularly a star, rather than risk having him foul out of the game. But does this make sense?
We can start by measuring how long a player sits on the bench once he receives a fifth foul. We analyzed almost 5,000 NBA games from the 2006–2007 to 2009–2010 seasons and found that when a player receives his fifth foul, on average, there is 4:11 left to play in the game. He’s benched for about 3:05 of that remaining time, leaving only 1:06 of actual playing time with five fouls. Stars are treated a little differently.* On average, they don’t receive their fifth foul until there is 3:44 left, and coaches bench them for a little more than two minutes.
The strategy of sitting a player down with five fouls and waiting until the end of the game to put him back in presumes that players, particularly stars, are more valuable at the end of the game than at other times. But this is seldom the case.
Statistical analysts in basketball have created “plus-minus,” or an “adjusted plus-minus,” a metric for determining a player’s worth when he is on the floor. Simply put, it measures what happens to the score when any particular player is on the court. When a player is plus five, that means his team scored five more points than the opponent when he was on the floor. Thus, this measure takes into account not only the individual’s direct influence on the game from his own actions but also the indirect influence he has on his teammates and his opponents. It measures his net impact on the game.
As often as we hear about “clutch players,” for the average NBA player, his contribution to the game, measured by plus-minus, is actually almost two points lower in the fourth quarter than in the first quarter. This is also true for star players and is even the case in the last five minutes of the game. Thus, the strategy of sitting a player down with five fouls to save him for the end of the game seems to be based on a faulty premise—he is no more valuable at the end of the game.
Now consider who replaces the player when he sits on the bench. The average substitute summoned in the fourth quarter to replace the teammate in foul trouble, not surprisingly, has an even smaller impact. Replacing the star player in foul trouble with a sub has the net effect of reducing the team’s points by about 0.17 for every minute the star is on the bench. This is a heavy price to pay. (We considered that a star player in foul trouble might compete conservatively, so maybe the difference between a sub and a star who plays conservatively with five fouls isn’t all that great. But no, it turns out that’s not true. If anything, star players have an even higher plus-minus than normal when they are in foul trouble.)
Leave a player with five fouls in the game and what happens? The average player with five fouls will pick up his sixth and foul out of the game only 21 percent of the time. A star is even less likely to pick up a sixth foul (only 16 percent of the time once he receives his fifth foul; remember “Whistle Swallowing”
?). Thus, leaving a player in the game with five fouls hardly guarantees that he’ll foul out.
Bottom line: An NBA coach is much better off leaving a star player with five fouls in a game. By our numbers, coaches are routinely giving up about 0.5 points per game by sitting a star player in foul trouble (and that doesn’t include the minutes he might have sat on the bench with three fouls in the first half). That may not seem like much, but in a close game, in which these situations often occur, it could mean the difference between winning and losing. We estimate that leaving a player in with five fouls instead of benching him improves the chances of winning by about 12 percent. Over the course of a season, this can mean an extra couple of wins. Yes, a player may foul out of a game, but benching the player ensures that he’s out of the game. As Jeff Van Gundy, former coach of the Houston Rockets and New York Knicks and current television announcer, once put it on the air, “I think coaches sometimes foul their players out.”
So why don’t NBA coaches let their players—particularly their stars—keep playing when they have a lot of fouls? Again, loss aversion and incentives. If you lose the game by following convention and sitting your player down, you escape the blame. But if you play him and he happens to foul out and the team loses, you guarantee yourself a heaping ration of grief on sports talk radio, in columns, and over the blogosphere even though the numbers strongly argue in favor of leaving the player in the game. As with punting on fourth down, coaches are willing to give up significant gains to mitigate the small chance of personal losses. Presented with this evidence, one NBA coach maintained that he was still going to remove a player when he picked up his fifth foul late in the game. Why? “Because,” he said, “my kids go to school here!”
Another example of loss aversion is seen in baseball. Game after game, the same scene plays out with almost numbing familiarity: It’s the ninth inning, the manager for the winning team summons the liveliest arm in the bullpen, the PA system cranks up ominous music—Metallica’s “Enter Sandman” more often than not—and out trots Mariano Rivera, the Yankees’ peerless relief pitcher, or his equivalent, to record the save. Why? Because conventional baseball wisdom dictates that managers use their best relief pitchers at the end of games to preserve victories. The presumption: This is the most important part of the game, with the greatest impact on the outcome. Not for nothing are these pitchers called closers.
But where is it written that a closer must close? What if the most important moment in the game, when the outcome is most likely to be affected, occurs earlier? Might it not make more sense to summon Rivera or Boston Red Sox closer Jonathan Papelbon when the game is tied in the sixth inning and there are runners on base? Wouldn’t they be more valuable at this juncture than they are when they usually report to work: the ninth inning when their team is ahead?
Yet you almost never see a manager use his bullpen ace before the eighth inning. Why? Because, again, what manager wants to subject himself to the inevitable roasting if this strategy fails? If your closer isn’t available to seal the game and you happen to lose … well, managers have been fired for lesser offenses. (Keep in mind, too, that closers like to accumulate “saves”—which occur if they are the last one pitching—since saves translate into dollars in the free agent market.)
Even in hockey, one can see loss aversion affecting coaching strategy. “Pulling the goalie” and putting another potential goal scorer on the ice near the end of a game when your team is losing decidedly improves your chances of scoring a goal and tying the game, but it also increases the risk that with the net empty, an opponent will score first and put the game out of reach. We found that NHL teams pull their goalies too late (on average with only 1:08 left in the game when down by one goal and with 1:30 left when down by two goals). By our calculations, pulling the goalie one minute or even two minutes earlier would increase the chances of tying the game from 11.6 percent to 17.6 percent. Over the course of a season that would mean almost an extra win per year. Why do teams wait so long to pull the goalie? Coaches are so averse to the potential loss of an empty-net goal—and the ridicule and potential job loss that accompany it—that they wait until the last possible moment, which actually reduces their chances of winning.
When do we see coaches take risks? Well, when do we take risks in everyday life? Usually when there’s little or nothing to lose. You’re less likely to be loss-averse when you expect to lose. Think of your buddy in Vegas who’s getting crushed at the tables. Already down $1,000, he’ll take uncharacteristic risks, doubling down when he might otherwise fold, in hopes of winning it back. How many times have you gotten lost driving the back roads and taken a few turns based on intuition rather than consult your map or GPS? “Hey, why not? I’m lost already.” For that matter, how many schlubs have overreached around the time of last call, figuring that if they get shot down, they’re no worse for it?
Coaches are subject to the same thinking: In the face of desperation, or a nearly certain loss, they’ll adopt an unconventional strategy. They’ll go for it on fourth down when their team is trailing late in the game. They’ll pull the goalie with a minute left. They’ll break the rotation and use their ace pitcher in the seventh game of a World Series. Why not?
Consider how the forward pass became a part of football. It was legalized in 1906 but hardly ever deployed until 1913, seven years later, when a small, obscure Midwestern school, Notre Dame, had to travel east to face mighty Army, a heavily favored powerhouse. With little to lose, the Fighting Irish coach, Jesse Harper, decided to employ this risky, newfangled strategy by using his quarterback, Charlie “Gus” Dorais, and his end, a kid named Knute Rockne. The summer before, Dorais and Rockne had been lifeguards on a Lake Erie beach near Sandusky, Ohio, who passed the time throwing a football back and forth. The Army players were stunned as the Irish threw for 243 yards, which was unheard of at the time. Notre Dame won easily, 35–13. After that, the Irish no longer resided in college football obscurity, Dorais and Rockne became one of the first and best passing tandems of all time, and the forward pass was here to stay. Dorais and Rockne would both go on to become revered Hall of Fame coaches, in large part because they continued deploying their passing tactics at the coaching level.
In the rare instances when coaches in sports embrace risk systematically—not in the face of desperation but as a rule—there is a common characteristic. It has nothing to do with birth order or brain type or level of education. Rather, those coaches are secure in their employment. If the experiment combusts, they have little to lose (i.e., their jobs).
Is it coincidence that New England Patriots coach Bill Belichick opts to go for it on fourth down more often than any of his colleagues do? True, Belichick is a cerebral sort who understands risk aversion and probability as well as anyone, but he’s also won three Super Bowls since 2001 and has more job security than any other coach in the NFL. We noticed that before he became a coaching star, Belichick approached the game quite differently. In his first head coaching stint in the NFL, with Cleveland, Belichick amassed an unimpressive 45 percent winning percentage and had only one winning season in five years. In Cleveland, he never exhibited the penchant for risk-taking that he shows with the Patriots. Back when he commanded the Browns, he went for it on fourth down only about one out of seven times. Since taking the helm at New England in 2000, Belichick has gone for it on fourth down a little more than one in four times.
But this tells only part of the story. In Cleveland, Belichick’s team trailed more often, and so many of the fourth downs he went for were in desperate situations—trailing near the end of the game. In New England, he had better teams and hence was ahead much more frequently, facing fewer “desperate” fourth-down situations. Looking only at fourth-down situations in the first three quarters with his team trailing by less than two touchdowns, we found that in Cleveland he went for it on fourth down only about one in nine times, but in New England he went for it about one out of four times in the same situations. Belichick was almost three ti
mes more likely to go for it on fourth down in New England than he was in Cleveland.
One could argue that having a better team in New England meant he was more likely to convert more fourth downs, which is why he chose to go for it more often. True, his Patriots converted more of their fourth-down attempts than his Browns did, but the differences weren’t big (59 percent versus 51 percent), certainly not three times larger. Plus, in Cleveland, since he attempted more “desperate” fourth downs, sometimes with more than ten yards to go, you’d expect the success rate to be lower. Controlling for the same yardage, Belichick’s Patriots were only slightly better than his Browns at succeeding on fourth down.
So what changed his appetite for risk? Belichick didn’t have great job security in Cleveland, as evidenced by his eventual dismissal in 1996. Even in New England the first couple of years, when his job was less certain, he remained conservative. Only after his teams had won multiple Super Bowls and he was hailed as “the smartest coach in football” did his risk-taking increase. His job security at that point wasn’t an issue.
But even a secure coach bucks convention at his own peril. In November 2009, the Indianapolis Colts, undefeated at the time, hosted the New England Patriots. The latest installment in the NFL’s most textured rivalry, it was a Sunday night affair televised on NBC. New England led comfortably for most of the game, but in the fourth quarter the wires of the Colts’ offense started to connect. Indianapolis scored a late touchdown to close the score to 34–28. The crowd noise at Lucas Oil Stadium reached earsplitting levels.
Scorecasting: The Hidden Influences Behind How Sports Are Played and Games Are Won Page 5
