And now, a guest post from Jeffrey Ma, author of the new book "The House Advantage: Playing the Odds to Win Big in Business," and one of the masterminds that inspired the movie 21 and the book "Bringing Down The House."
In my new book I discuss a common mistake that most "recreational" blackjack players make called omission bias. Omission bias is a desire to favor failure or bad consequences by inaction rather than action.
Anyone who has been at a blackjack table has seen it. Players standing on 14 against a dealer's 9, hoping against hope that that dealer busts. Not wanting to take the card that ends the hand instantly, instead attempting to extend the hand even if it is the incorrect play statistically. An excerpt from "The House Advantage" on this topic:
In a study entitled "Fear and Loathing in Las Vegas: Evidence from Blackjack Tables," Bruce Carlin of UCLA and David Robinson of Duke University analyze the decisions of blackjack players and find people make two types of mistakes when deviating from basic strategy--those of inaction and those of unnecessary or suboptimal action. They found that errors of inaction occurred four times more than errors of incorrect action. In general, most people were too conservative, deciding not to take a card in order to avoid going over 21. Instead they waited and hoped that the dealer would bust.
The cost of inactivity in this study was significant, as the players that played optimally won 20 times more often on similar hands than the players who played scared. Our blackjack team used to call this "playing not to lose."
The analogy I often use is that guy/girl who sticks out a relationship much longer than he or she should, simply because maintaining status quo is so much easier than the extreme act of breaking up. Yet every day the couple stays together is an active decision by the couple and should be treated equally with its alternative. Very few people look at decisions that way and fall prey to omission bias.
I thought of this important lesson as I read this morning that it is looking more and more like LeBron is going to stay in Cleveland. Is LeBron falling for omission bias? Is he favoring maintaining status quo over possiblly more fruitful situations? Or has he actually given each opportunity the same weight and has simply chosen the alternative he thinks is the best?
Without getting into LeBron's head it is impossible to know for sure, but I do think his desire to stay in Cleveland illustrates the great pull that inactivity has over activity.
Of course, his decision isn't as simple as standing a 14 against a 9, and unlike blackjack there's no way to know definitively if his choice is right or wrong. In addition, there certainly is loyalty, familiarity and intangibles that are influencing his decision -- things not present at the blackjack table.
Yet a part of me wonders if LeBron had all the options laid out in front of him independent of where he currently plays, would he choose the Cleveland option? My guess is no. And in the end I think he is making a mistake by not moving to greener pastures, although I certainly respect his loyalty.