Playing it Safe Is Not The Best Bet

Caution Is Costly, Scholars Say

Some of the nation's top economists, psychologists and statisticians are coming to see sports as a subject that requires their attention. Trying to understand human decision-making, they are writing papers about such choices as when to punt, or when to take out a basketball player in foul trouble. About 25 of them gathered in the spring for a two-day academic conference in Arizona, where they went to a spring training game once their work was done.

Their research is quickly leading to a theory that will resonate with any fans who have ever screamed for their team to go for it on fourth down: the professors say that managers, coaches and players are often far too cautious for their own good.

"Teams are averse to going for all or none," said Steven J. Sherman, a psychology professor at Indiana University, who came up with the idea for the conference with Thaler when they were having dinner in an Afghan restaurant in Chicago last year. "Teams don't want to do something that puts the game on the line right now."

They intentionally walk Barry Bonds even though statistics offer a clear argument for pitching to him. Giving him an automatic place on first base usually leads to more runs in the inning than one of his at-bats does.

Behind by 2 at the end of a basketball game and playing a superior team, coaches generally do not attempt a 3-point shot. Yet that shot often offers a better chance of winning than the combined odds of making a 2-pointer at the buzzer, then winning in overtime.

In recent years, economists and psychologists have become increasingly interested in the ways that people do not act rationally. Known as behavioral economics, the field examines why stock-market bubbles happen and why many people do not save enough money for retirement, among other things.

Sporting events, which are played out step by step in the most public of settings, allow the researchers to determine the precise moment that somebody veers from good sense.

"My justification for doing this is that it's the one really high-stakes activity where you get to watch all of the decisions," Thaler said. "If Bill Gates invited me to watch all of his decisions, I'd talk more about that."

EL - This is the classic case in business as well, Retailers have the perfect opportunity to try out different strategies at low risk but are usually adverse to doing that because they are afraid of possible failures instead of factoring in the sucesses as well. If you go with the professional advisors on political campaigns they also have that tendency to play it cautious even if it is likely to lose. Look at the DLC after ten years of losing campaigns.