Given how unfathomable the game of cricket is for the uninitiated (and initiated) I am at pains to reference such a wonderfully convoluted activity; however, sometimes sport offers up such vivid examples of our behavioural biases in action that it proves irresistible subject matter. This was the case on Sunday when England won the Cricket World Cup for the first time. Rest assured this post is more about our behavioural absurdities, than it is about cricket.
Before Sunday, the Cricket World Cup had been held 11 times beginning in 1975 and running every four years (approximately). Despite being one of the pre-eminent teams, England had never won the tournament, but had finished runners-up on three occasions. The 2015 World Cup saw a particularly dispiriting and ignominious exit for the England team, which brought about an overhaul of their approach to the game and an ambitious four-year plan to win the trophy when the competition returned to home shores in 2019.
England did indeed win the 2019 Cricket World Cup after overcoming New Zealand in Sunday’s final, but it is unlikely that this would have happened were it not for an outrageous slice of good fortune. Without going into any unnecessary detail – very late in the game a ball took a wicked deflection off an England batsman after being thrown by a New Zealand player, which resulted in England being gifted extra runs through nothing but sheer chance. Absent this incident England would probably not have lifted the trophy. Whilst all sport is to an extent defined by luck and randomness, it is worth highlighting that every ex-professional cricketer I have heard discuss this incident has said that they have never seen such a thing happen before. For it to transpire in such a pivotal match at such an important stage of the game is delightfully ridiculous.
It is not fair to say that England were lucky to win the World Cup – there was a great deal of skill that got them to the position to win the competition at all – rather they would have been unlikely to do so without the assistance of an unprecedented freak occurrence.
Following England’s victory, the immediate and persuasive narrative around England’s victory has been:
- The meticulous four-year plan to transform the game was an incredible success.
- The team fully justified their pre-tournament favourites tag.
- The players were able to handle the pressure of a World Cup final.
- The team proved their ability to win on a difficult pitch*.
These points all have a level of validity, but England probably only won the game because of a once-in-a-lifetime piece of luck – what if everything had been the same, but that outrageous deflection had not occurred? What would the prevailing narrative had been then?
- England’s four-year plan failed as they lose yet another final.
- The team didn’t live up to their billing as pre-tournament favourites.
- They didn’t cope with the pressure of a World Cup Final.
- The team can only win on ‘easy’ pitches.
The bounce of a ball not only changed the result of a cricket tournament and the lives of the England players, it transformed our perception of everything that led to that victory. Clearly this is an absurd situation, the assessment of a detailed four-year plan cannot hinge on the random deflection of a ball; but this is the very nature of outcome bias – we take the result and then work back, viewing everything through the lens of that outcome. Taking such an approach in activities where there is luck and randomness involved is hopelessly flawed. We seem to operate with a binary narrative switch, which will flick between two entirely contradictory rationales depending on the result.
In my experience outcome bias is one of our most intractable failings, trying to persuade anybody to look past the result and consider the quality of the process underpinning it is nigh on impossible – you often look foolish even suggesting it. Once the result is in, the narrative is fixed.
So why does the Cricket World Cup matter to investors? Most sports are dominated by skill but punctuated with doses of luck – in many cases outcomes are actually a reasonable proxy for the quality of a process; for investment the reverse is true – it is luck and randomness with a smattering of skill. This means we should be even more leery of outcomes alone telling us anything meaningful, but if anything, we are more reliant – performance frames and overwhelms virtually all investment activity and decision making. We are obsessed by the name on the trophy, and care far too little about how it got there.
*Sorry, this is jargon and unnecessary detail. Certain cricket pitches are harder to bat on and England were accused earlier in the tournament of being only suited to playing on easier pitches.