Thursday, January 7, 2016

Are Sports Fans Rational?

In an excellent presentation on decision making today, Wharton Professor Joseph Simmons mentioned a study he conducted showing how sports fans participated in motivated reasoning. Specifically, Simmons displayed a graph from his paper co-written by Cade Massey and David Armor , showing that participants in the study were much more likely to pick their favorite team to win. They did this even though they had financial incentive to pick accurately. (If you want to look at the paper, its the 2011 'Hope Over Experience' paper on Simmons' page).

The paper immediately struck me as correct but incomplete. Yes, fans were participating in motivated reasoning, but that wasn't the only thing going on in the data. Their are reasons sports fans would pick their team to win even if they expected them to lose.

Take fantasy football for instance. For my fantasy teams, I almost always end up with a disproportionate number of Ravens (my home team). I have no doubt the same is true for millions of others. It's fun to route for players I like, and even more so when I am lucky enough to be at the stadium to watch the game. Moreover, its awkward when you are partially routing for the other team.

Let's say Ben Roethlisberger (of the Pittsburgh Steelers) was my quarterback this year and I made the championship game of my league (neither are true). This year in Week 16, typically championship week in fantasy football, Roethlisberger was playing the Ravens in Baltimore. I was fortunate enough to go to the game. As it turned out, Big Ben has a horrible game and the Ravens pulled off the surprising sweep of the Steelers. It even made it seem as if the Steelers would miss the playoffs until the Jets got Fitzpatricked. I was jumping, screaming, and celebrating like all the other fans. It was definitely the highlight of the season for the Ravens. But if I had had Roethlisberger on my team, I would not have been nearly as happy.

This same reasoning also applies to betting on games. If I had picked the Steelers to win, I would have felt more neutral about the victory. People don't watch sports to be ambivalent; they watch them to be excited, to scream at the television, to curse the refs, and to high-five their friends. A lot of people bet on sports as much to make the games more exciting as they do to win money. Games with teams you don't care about become a lot more exciting when you have a routing interest.

In other words, for the majority of sports fans, the utility they get from watching games is from supporting a team. Their increase in welfare comes from the experience of cheering for a team, be it out of life long allegiance or a recent $20 bet. As such is the case, I believe most fans betting on their favorite team in the Massey et al paper were behaving rationally. They got more utility out of unequivocally routing for their team (and now they had money on them!) then they got out of their expected financial gains from picking the more likely victor.

I think this logic also explains another interesting finding of Massey et al: that supporters of teams with very very low odds are more rational than teams with about a 50/50 shot at winning. Fans of teams in a close matchup expect to experience the excitement of a game that is likely to be back and forth. Fans of bottom-feeding teams have different expectations though: they expect to be bored by their team getting destroyed. The utility they derive from watching the game is lower than the expected gain from accurately predicting the correct result.

To be clear, I'm not arguing against anything in the paper. The authors say in their conclusion that its an open question about whether these optimistic fans are being rational. I am merely arguing that screaming fans might be pretty smart after all.

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