The Nudge blog passes along some March Madness advice from the economics textbooks: When you're filling out your bracket, always pick the highest ranked team. Always.
"Most of the information useful for predicting a win has already been
incorporated into their seedings," Matthew Hudson writes in Psychology Today. Why do we think we're smarter than the seedings? Because we know the game-changing statistics, of course. But research has found that including team stats on top of
seedings did not affect the number of upsets people predicted. It's more likely that college basketball fans randomly write in the number of upsets we suspect will occur every year based on
In behavior economics, this is called probability matching. If a blindfolded person is picking out of a box with 25 percent red balls and 75 percent blue balls, Hudson explains, she'll likely try to grab three blue balls for every one red. This will yield a 62.5 percent success rate, on average. "But if they just guessed blue on each draw, they'd be right, on average, 75 percent of the time," he writes...
Similarly, people know there will be a certain number of upsets in each NCAA tournament, and therefore betting on a Cinderella-free tourney seems silly. The only logical thing to do, they conclude, is to figure out when those upsets will take place. The drawback, of course, is that by shooting for perfection, they end up handicapping themselves. In McCrea and Hirt's research using real NCAA data, for example, people would have been much better off just sticking to the seedings.
Read the full story at Psychology Today.
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