When it comes to movie endings, my favourite is the last scene of the classic western Butch Cassidy and the Sundance Kid. In this scene Butch Cassidy and the Sundance Kid have taken cover in a building which is surrounded by dozens of Bolivian policemen.
Both Butch and the Kid are seriously injured. Butch suggests to the Kid that after this they should move to Australia. And this is where the movie ends, in a freeze frame shot, in sepia tone, showing the pair charging out of the building they are hiding in, with all guns blazing. The Bolivian policemen are also repeatedly firing at them.
Earlier in the movie, Butch and the Kid are shown fleeing the United States where they are in trouble. They move to Bolivia because they believe that the country has a lot of gold and silver. Or as Butch says in the movie “You wouldn’t believe what they’re finding in the ground down there. They’re just fallin’ into it. Silver mines, gold mines, tin mines, payrolls so heavy we’d strain ourselves stealin’ ’em.”
But that is not how things turn out. As Duncan J Watts writes in Everything is Obvious – Once You Know the Answer “when they finally arrive (in Bolivia) after a long and glamorous journey abroad a steamer from New York, they are greeted by a dusty yard filled with pigs and chickens and a couple of run-down stone huts. The Sundance Kid is furious… “You get much more for your money in Bolivia,” claims Butch optimistically. “What could they possibly have that you could possibly want to buy?” replies the Kid in disgust.”
Things end badly for Butch and the Kid and in the last scene they are presumably killed. So was their decision to go to Bolivia a good one or a bad one? “Intuitively, it seems like the latter because it led inexorably to Butch and the Kid’s ultimate demise. But…that way of thinking suffers from creeping determinism – the assumption that because we know things ended badly, they had to have ended badly,” writes Watt.
Creeping determinism is also referred to as outcome bias. Nobel Prize winning psychologist Daniel Kahneman (he got the Nobel prize for economics) explain outcome bias in his book Thinking Fast and Slow. It is a situation in which “observers…asses the quality of a decision not by whether the process was sound but by whether its outcome was good or bad.”
Mahendra Singh Dhon, the captain of the Indian cricket team, i has become the most recent victim of the outcome bias. He has been criticized for asking Ishant Sharma to bowl the 48th over of the third one day international against Australia, which was played on October 19, 2013. Before Sharma bowled, Australia needed 44 runs to win of 18 balls. India was in the driver’s seat. In this over Sharma gave away 30 runs and India consequently lost the match.
Shashi Tharoor, the minister of state for human resources development, tweeted immediately after the match “Why Ishant & not Vinay for 48th over when VK(i.e. Vinay Kumar) had 2 left?” This is a clear case of sounding wise after something has happened or to put it more technically Tharoor was promulgating the outcome bias.
Michael Mauboussin and Daniel Callahan of Credit Suisse explain this brilliantly in a research paper titled Outcome Bias and the Interpreter – How Our Minds Confuse Skill and Luck released on October 15, 2013. They define outcome bias as a situation in which “people take outcomes into account in a way that is irrelevant to the true quality of the decision.”
This is exactly what Shashi Tharoor did when he questioned Dhoni’s decision of bowling Sharma in the 48th over. Lets look at some numbers. Ishant Sharma has played 68 matches and has conceded runs at the rate of 5.7 per over. Vinay Kumar has played 29 matches and has conceded runs at the rate of 5.7 per over (This takes into account their performance on October 19, 2013, I couldn’t find numbers for before that).
So as far as runs per over are concerned both Kumar and Sharma are on an equal footing. But what about their career averages? Sharma averages 31.36 runs per wicket whereas Kumar averages 36.25 per wicket. So I am not surprised that Dhoni went for Sharma even though Kumar also had two overs left. Given the choice he had at that point of time, bowling Sharma was a better bet than Kumar, numbers clearly show that.
Bhuvneshwar Kumar, the other fast bowler in the team, had already bowled his quota of ten. But assuming he had an over left, Sharma still would have been a better bet. A recent piece on Cricinfo pointed out that Sharma’s concedes runs at the rate of 7.38 runs per over in the last 10 overs. His average is at 24.22 per wicket. In contrast Bhuvneshwar concedes runs at the rate of 8.46 runs per over. While Bhuvneshwar is an excellent bowler during the initial overs, his bowling during the death overs, still needs to improve a lot.
This is not to defend Ishant Sharma. I personally feel he shouldn’t be in the team at all. All I am trying to say is that on October 19, 2013, Dhoni made the correct decision while bowling Ishant in the 48th over, even though India lost the match in the process.
Another factor that would have influenced Dhoni’s decision would be the fact that Sharma brought India back into the Champions Trophy final against England, by dismissing Eoin Morgan and Ravi Bopara of consecutive balls.
The moral here is that even good decisions can lead to bad outcomes. As Mauboussin and Callahan point out “Every day, people who make good decisions with bad short-term outcomes risk losing their jobs. This might include the head of a studio in Hollywood who failed to deliver a blockbuster, a chief executive officer who made a reasoned investment that soured, or a money manager with poor results for a quarter or two. The career risk in making better but bolder decisions can be too high for many professionals to handle.”
When such decisions go wrong, people who made them, are heavily criticised, as Dhoni has been And that’s because of the outcome bias. As Kahneman puts it “When the outcomes are bad, the clients often blame their agents for not seeing the handwriting on the wall – forgetting that it was written in invisible ink that became legible only afterward.”
In fact, Mauboussin and Callahan share a very interesting experiment which shows how human brains are tuned towards the “outcome bias”. This experiment was run by Jonathan Baron and John Hershey, two scholars of decision science.
In this experiment, the subjects of the experiment were told about a 25 year old man who was unmarried and had a steady job, and who had won a prize. The prize was essentially choice between winning $200 for sure or an 80% chance of winning $300 and a 20% chance of winning nothing.
The subjects were then told that the man selected the gamble. “The researchers then showed the subjects two different outcomes. In one the man won $300 and in the other he won nothing. They then asked the subjects to rate the quality of the man’s decision on a scale from 30 (clearly correct, the opposite decision would be unacceptable) to -30 (incorrect and inexcusable)…When the subjects were told that the man had won the money, they rated the quality of his decision a 7.5. When the researchers told the subjects that the man had earned nothing, they rated his decision a -6.5,” write Mauboussin and Callahan.
What does the result tell us? “These ratings are clear evidence that the outcomes deeply influenced how the subjects assessed the decision. Somehow, the subjects didn’t distinguish between two independent issues: the quality of the decision and the outcome from the decision,” explain Mauboussin and Callahan.
In fact, worse the consequence the greater is the outcome bias. The attacks carried out by al-Qaeda on the World Trade Centre on September 11, 2001, are a very good example. On July 10, 2001, the Central Intelligence Agency(CIA) came to know that al-Qaeda might be planning a big attack against the United States. “George Tenet, director of the CIA, brought the information not to President George W Bush but to National Security Advisor Condoleeza Rice. When the facts later emerged, Ben Bradlee, the legendary executive editor of The Washington Post, declared “It seems to me elementary that if you’ve got the story that’s going to dominate history you might as well go right to the president.” But on July 10, no one knew – or could have known- that this tidbit of intelligence would turn out to dominate history,” writes Kahneman.
Hence, it is always easier to be wise after the event and criticise people. But its worth remembering what Mauboussin and Callahan point out “We know that when we see an outcome and don’t know what information the decision maker had, our minds assume that good outcomes are associated with good decisions and bad outcomes are linked to poor skill.”
(Vivek Kaul is the author of Easy Money. He tweets @kaul_vivek)