Understanding the Halo Effect

The Halo Effect

For the majority of people, these descriptions leave a more favourable impression of Alan than of Ben. This is a strange assessment given that their listed characteristics are identical and just presented in reverse.

Instead of acknowledging that the only difference is in the order that the data is received, the lazy side of our mind (often referred to as System 1) seeks a consistency in evaluation in order to quickly build a coherent narrative.

The initial positive trait – Alan is intelligent – inclines us to interpret the latter traits to support this view and vice-versa with envious Ben. This is known as the Halo Effect.

"It is easy to see how betting judgements are biased by the order in which information is acquired"

What has this got to do with betting? Change the example from fictitious men to two soccer teams or tennis players, and the character descriptions to results or performances, and it is easy to see how betting judgements are biased by the order in which information is acquired, and the significance of particular performances.

This kind of bias isn’t isolated, people are also susceptible to the Availability Heuristic that leads us to place greater disproportional significance to events/ideas that are easiest to recall. Availability is largely linked to the strength of our emotional response to events, which is greater when they make a more lasting impression e.g. high-scoring games, five-set classics, etc.

So with knowledge of the Halo Effect and Availability Heuristic, let’s look at some examples within betting where they apply:

The Brazilian soccer team

The reverence with which Brazil’s national soccer team is held sets them aside from all other national teams, and in the minds of the betting public, out of proportion to a truly objective appraisal. It is a fact that the Seleção have won the World Cup more often than any other nation – but their five victories came in two distinct periods 1958-70 and 1994-2002, while at the last three tournaments they failed to reach the final.

Their periods of success starting with the golden age of Pele, Carlos Alberto, Rivelino, etc. have created a ‘Halo’ that skews the perception of all Brazilian teams, which availability bias confirms with the easy recollection of frequently aired wonder-goals, especially from the 1970 tournament in Mexico.

Younger generations may be less familiar with events from over 40 years ago but the media perpetuates the idea (confirmation bias) by hammering home the idea that all Brazilian players are super-skilled. This consistency of evaluation creates a coherent narrative. “Brazil has produced many of the world’s most skilful players – therefore all Brazilian players are skilful”.

Interestingly, the extreme nature of their elimination from the 2014 World Cup, where as hosts and favourites they were humbled 7-1 by eventual winners Germany, may actually have been enough to eradicate that historical Halo, or at least dim it a little.

The Halo Effect also explains why a disproportionate amount of credit is given to famous ex-soccer players who move into management. There is no statistical evidence that being a good player makes you a good manager. Mark Hughes was a great player at Manchester United and Chelsea, but expectations of him as a manager have subsequently been set at the same level of achievement. The Halo created by playing exploits leads many clubs, fans and bettors to expect more than is realistic from those individuals when they are picking the team. This subject has gained exposure through the book Moneyball, and film of the same name.

Reverse Halo

The Halo Effect can also work in reverse. If the first impression of your holiday hotel is a broken sign, this can set a negative context biasing all subsequent judgements about your stay. From a betting perspective, a bad performance disproportionally biases future assessments.

"Our intuitive mind is valuable and very powerful, and can often save our lives by perceiving danger"

After relinquishing a four-shot lead going into the final round of the 2011 US Masters, Rory McIlroy was labelled a choker and worse by newspaper headlines. Prior to the tournament he was one of the sport’s rising stars, but one dramatic round of 80 – easily recalled given the visible turmoil of the young golfer (thanks to the Availability Heuristic) – changed all that in many bettors’ eyes. Any bettor able to take a more rounded judgement would have benefited two months later when he won the US Open by eight shots, then in 2012 he won his second major, the US PGA Championship

Had these events happened in reverse – winning two majors then collapsing in the final round of the Masters – assessments of his future performances would have been more forgiving. This is particularly pertinent when McIlroy historically walked off the course halfway through round two of the Honda Classic with a 7-over par score and in a ‘bad state mentally’. The ‘Halo’ that major success had given subsequently tempered bettors’ opinions of McIlroy’s chances of future success.

Lessons to Learn

Our intuitive mind is valuable and very powerful, and can often save our lives by perceiving danger. However, it has a real weakness when it comes to statistical assessment. The trick is to force our effortful mind (System 2) into action.

Before making a betting choice, it is important to deliberately look for three counter arguments to your face value assessment and employ as much objective data with as big a sample size as possible, whilst ignoring mainstream media which often seeds simplistic narratives.

Bettors who read about interesting aspects of psychology like the Halo Effect may be inspired to the point of sharing their new knowledge, but this doesn’t mean that they can modify there own propensity to place ‘Halos’ on sportsmen or teams. The test is not whether you have learned a new fact but whether your understanding of situations you encounter has evolved.

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