Confidence can come and go for some bettors and it will often have an impact on how they bet. Some may view confidence as an integral part of maintaining success, while others believe it might hinder the decision-making process. This article analyses whether confidence is a good or a bad thing in betting. Read on to find out more.
Confidence is often quoted by pundits across many different sports as a key factor in a player or team’s success. While we may buy into the fact that confidence can help improve performance, and a lack of it may result in a decline, it is certainly difficult to measure. Although it is difficult to determine to what extent confidence can impact performance, it is important to understand why it can not only have an impact on athletes, but bettors as well.
Betting against confidence
There are many examples of people buying into to past performance as an indicator of future success. This is borne out by the hot hand fallacy and a tendency for people to attribute more meaning to a random pattern of success than might actually be the case. There may be a boost of confidence that has contributed to continued success but the hot hand fallacy makes us overestimate these contributing factors and neglect the randomness involved.
It is interesting to consider that because of the bias that arises from the hot hand fallacy, there could actually be value in betting against teams who are “full of confidence”. Because the market buys into notions such as a feel-good factor or overestimates the likelihood of a good run of form continuing, the odds on the alternative options within the market may be higher than they should be and thus, offer a value bet.
How can confidence help with betting?
Most bettors who have enjoyed continued success will likely tell you that it’s the result of a lot of hard work. In addition to the putting the work in and acquiring the knowledge and skill that is required to identify value in a betting market, you also need a bit of luck and a fair amount of patience to see things through. While confidence won’t necessarily provide you with any of those, it can help you find the motivation and perseverance when you start to doubt yourself or your process (something that is completely natural to bettors when things don’t go to plan).
Confidence in your own ability or the ability of your model will help you keep working to improve and try new things. Confidence alone is never going to be enough and ultimately, rigorous testing and assessment of your performance will tell you how good you are at betting. However, confidence can certainly help you deal with variance and inevitable losses that happen on the way to achieving success.
If the losses stack up but you keep going with the same approach, driven by confidence in thinking that you are right and you’ve just been a victim of bad luck, the losses will only continue.
Confidence can not only help you find the right bet, it can help when it comes to placing that bet. Given that betting involves the act of risking money on your opinion, it often takes a certain level of confidence in yourself and your predictive abilities to potentially part with that money. This becomes even more apparent when you are risking large sums of money. It is important to be able to question yourself and your decisions, but if you’re going to make it as a bettor, there are points when you need to commit and take a risk.
If you want to make a career out of betting and earn enough money to generate an income then you’ll likely find yourself risking a lot of money (either in big individual bets or a lot of relatively small bets). It is important that you never bet more than you can afford to lose, but you also need to have enough confidence in yourself and what you are betting on to be able to part with that money.
The impact of overconfidence in betting
There is clearly a positive impact that confidence can have on bettors and our ability to make the right decisions when betting. However, there are also some dangers to be wary of that can be caused by confidence. The most obvious one to start with is overconfidence.
Overconfidence is a product of illusory superiority (or the “above average effect”) and, as the name would suggest, it results in an individual having excessive confidence in their skill or judgement. That is to say that we overestimate our own performance or our performance relative to others. In its simplest terms, overconfidence means we think we’re better than we actually are.
A lot of bettors will risk their money based on their perception of their predictive powers, with limited analysis to back it up. For these bettors, and many others, overestimating your ability to predict future outcomes will obviously be a costly mistake. Dealing with losses in betting is natural and can help question your approach. If the losses stack up but you keep going with the same approach, driven by confidence in thinking that you are right and you’ve just been a victim of bad luck, the losses will only continue.
Confidence and our perception of others
Excessive confidence in our own skill and the impact it can have on the decision-making process in betting is one thing, but it is equally as harmful when it impacts our perception of the ability of others. This can distort our understanding of the level of competition faced in the betting market.
If you have too much confidence in your own ability and discount the ability of others, you will underestimate how difficult it is to be in the small percentage of successful bettors. If you think you are better than others, this can not only influence your mindset and work ethic but also lead to missed opportunities and poor decisions being made.
There may be a boost of confidence that has contributed to continued success but the hot hand fallacy makes us overestimate these contributing factors and neglect the randomness involved.
Bettors need to have respect for the market as a whole given that it is such a highly competitive environment. This includes both the bookmaker and other bettors. If you think you’ve got great odds for a bet, it is always worth considering why they might be available. As George Akerlof explains in his 1970 paper The Market for Lemons: Quality Uncertainty and the Market Mechanism, asymmetric information will lead to adverse selection.
Let’s say there is a soccer match and odds of 3.45 might be available on the away team when it you think they should be 2.80. It might seem like a great bet and if you are confident in your calculations you would take the odds in an instant. However, what about the rest of the market? Why is the bookmaker offering those odds and why has no one else bet on them to drive the price down? Is there information out there that you aren’t aware of? Is the information you are using completely accurate? There is a fine line to be tread between confidence and doubt, one that the best bettors in the world are able to constantly be on the right side of.
We can also have overconfidence in another individual (a tennis player) or group of individuals (an NFL team) and this results in us overestimating the likelihood that they may win an event. This can also work the other way as well as we may have very little confidence in an individual or team taking part in an event and therefore underestimate their ability and chance of winning.
What you bet on and how much you bet on will be influenced by your level of confidence in yourself and others. Too much confidence in yourself or what you are betting on can be very dangerous for those hoping to achieve long term success. So can too little confidence in what you are betting against (for a specific event or the market in general). Conversely, overconfidence in the ability of the bookmaker or betting market will result in self-doubt and you will struggle to find enough value or place enough bets at a valuable price to achieve success.
The Dunning-Kruger effect
Another product of overconfidence in our ability relative to others is the Dunning-Kruger effect. David Dunning and Justin Kruger initially conducted their study Unskilled and Unaware of It: How Difficulties in Recognizing One's Own Incompetence Lead to Inflated Self-Assessments in 1999. There are many interesting stories that show how illusory superiority has manifested itself in everyday life, but the graph below highlights Dunning and Kruger’s key findings from their study.
It is interesting to note that, according to Dunning and Kruger, elite level performers tend to underestimate their own ability and those who struggle will overestimate their ability. It might be an interesting exercise to think where you might fit on the above graph if the test score was based on betting skill.
Confidence is always going to be a part of betting. It will impact what we bet on, when we bet, and how much we bet. The important thing for bettors is to always remember the impact that confidence can have. It can be a good thing, providing us with perseverance to reach an end goal, but it can also cloud our judgement.Confidence can contribute to many biases that we find in the betting market. The majority of bettors may not be aware of the influence these biases have, some will acknowledge them and work to eliminate their influence on their own decisions. Very few, however, will invest time into identifying the true cause of these biases and be able to take advantage of them and the valuable betting opportunities they provide.