Second-guessing yourself leads to worse decisions, study finds

When facing a tough decision, it pays to trust your gut.

Second-guessing yourself leads to worse decisions, study finds
Pixabay
  • A recent study examined the accuracy of predictions of soccer matches on a popular betting website.
  • The users were allowed to revise their bets up until the match started.
  • Surprisingly, the results revealed that the revised bets were much more likely to be incorrect.


Imagine you were asked to predict the score of an upcoming match between your favorite sports team and its rival. Now, imagine you were allowed to revise your prediction at any time before the match. Would it do you any good?

Probably not. A new study suggests that it's better to trust your gut and stick to your original prediction. Published in the Journal of Behavioral and Experimental Economics, the study examined the accuracy of predictions made by 150 users of a popular sports betting website. In total, these users made 57,000 predictions on the final scores of soccer matches in the English Premier League during the 2017-2018 season.

Users were allowed to revise their predictions anytime before the match. But that was rare: The average user only revised about 15 out of 380 predictions, and the majority of these revisions were typically made minutes before the match began, possibly after learning new information that might affect the outcome. Some revisions were made weeks or months before the match, but ultimately, the average time between the first and final predictions was two days.

Why did users change their minds?

"We can only speculate, but we might imagine that game players input their initial forecast, following which they look at the latest online betting odds on the match, or look for other information which might affect their judgement, such as news on team selection for the match," the researchers wrote. "Alternatively, these revisions could simply be the result of changes to initial judgements without any new information."

You might think the ability to revise your prediction would be an advantage. After all, maybe you had more time to carefully consider which team is more likely to win. Maybe public opinion on the two teams had shifted over time. Or maybe one of the teams had recently begun an incredible winning streak.

But the results of the study showed that prediction accuracy decreased significantly — by about 17 percent — when users revised their original predictions. Why? Given that the study controlled for variations by players and teams, it's unlikely that the drop-off in accuracy was due to some matches being harder to predict than others, or some users being better predictors than others.

Pixabay

One possible explanation is a behavioral bias that describes how people are likely to overreact to news that is salient. So, when you learn, for instance, that a player on one of the teams was injured, you might respond excessively to that news, leading you to revise your original prediction.

The results revealed that revisions made after a longer period of time, as opposed to just a few minutes, were much less likely to be correct. Also, users were less likely to predict correctly when their revised predictions included higher scores, for example, changing a 1-2 outcome to a 2-3 outcome. Interestingly, most users underestimated the likelihood of a 0-0 draw. Broadly, this suggests that we tend to falsely believe it's more likely for something to happen than nothing.

Trust your gut

The researchers wrote that their findings "could have relevance to other contexts where judgmental forecasting explicitly takes place and which have real economic importance, such as in company management and planning, financial markets and macroeconomic policy."

Of course, sometimes new information should cause us to revise our decisions. But for situations where new information is unlikely to significantly alter the outcome, the results suggest it's best to make a decision and stick with it.

This aligns with research from Stanford professor Baba Shiv, an expert in the neuroscience of decision-making. Shiv's research found that, even though we often face tough trade-offs when making complex and emotional decisions, a key component of successful decisions is staying committed to our choice. Shiv told Stanford Business magazine: "When you feel a trade-off conflict, it just behooves you to focus on your gut."

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A close up of Bathynomus raksasa

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Surprising Science
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Volcanoes to power bitcoin mining in El Salvador

The first nation to make bitcoin legal tender will use geothermal energy to mine it.

Credit: Aaron Thomas via Unsplash
Technology & Innovation

This article was originally published on our sister site, Freethink.

In June 2021, El Salvador became the first nation in the world to make bitcoin legal tender. Soon after, President Nayib Bukele instructed a state-owned power company to provide bitcoin mining facilities with cheap, clean energy — harnessed from the country's volcanoes.

The challenge: Bitcoin is a cryptocurrency, a digital form of money and a payment system. Crypto has several advantages over physical dollars and cents — it's incredibly difficult to counterfeit, and transactions are more secure — but it also has a major downside.

Crypto transactions are recorded and new coins are added into circulation through a process called mining.

Crypto mining involves computers solving incredibly difficult mathematical puzzles. It is also incredibly energy-intensive — Cambridge University researchers estimate that bitcoin mining alone consumes more electricity every year than Argentina.

Most of that electricity is generated by carbon-emitting fossil fuels. As it stands, bitcoin mining produces an estimated 36.95 megatons of CO2 annually.

A world first: On June 9, El Salvador became the first nation to make bitcoin legal tender, meaning businesses have to accept it as payment and citizens can use it to pay taxes.

Less than a day later, Bukele tweeted that he'd instructed a state-owned geothermal electric company to put together a plan to provide bitcoin mining facilities with "very cheap, 100% clean, 100% renewable, 0 emissions energy."

Geothermal electricity is produced by capturing heat from the Earth itself. In El Salvador, that heat comes from volcanoes, and an estimated two-thirds of their energy potential is currently untapped.

Why it matters: El Salvador's decision to make bitcoin legal tender could be a win for both the crypto and the nation itself.

"(W)hat it does for bitcoin is further legitimizes its status as a potential reserve asset for sovereign and super sovereign entities," Greg King, CEO of crypto asset management firm Osprey Funds, told CBS News of the legislation.

Meanwhile, El Salvador is one of the poorest nations in North America, and bitcoin miners — the people who own and operate the computers doing the mining — receive bitcoins as a reward for their efforts.

"This is going to evolve fast!"
NAYIB BUKELE

If El Salvador begins operating bitcoin mining facilities powered by clean, cheap geothermal energy, it could become a global hub for mining — and receive a much-needed economic boost in the process.

The next steps: It remains to be seen whether Salvadorans will fully embrace bitcoin — which is notoriously volatile — or continue business-as-usual with the nation's other legal tender, the U.S. dollar.

Only time will tell if Bukele's plan for volcano-powered bitcoin mining facilities comes to fruition, too — but based on the speed of things so far, we won't have to wait long to find out.

Less than three hours after tweeting about the idea, Bukele followed up with another tweet claiming that the nation's geothermal energy company had already dug a new well and was designing a "mining hub" around it.

"This is going to evolve fast!" the president promised.

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How were mRNA vaccines developed? Pfizer's Dr Bill Gruber explains the science behind this record-breaking achievement and how it was developed without compromising safety.

How Pfizer and BioNTech made history with their vaccine
Sponsored by Pfizer
  • Wondering how Pfizer and partner BioNTech developed a COVID-19 vaccine in record time without compromising safety? Dr Bill Gruber, SVP of Pfizer Vaccine Clinical Research and Development, explains the process from start to finish.
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  • The Pfizer-BioNTech COVID-19 Vaccine has not been approved or licensed by the Food and Drug Administration (FDA), but has been authorized for emergency use by FDA under an Emergency Use Authorization (EUA) to prevent COVID-19 for use in individuals 12 years of age and older. The emergency use of this product is only authorized for the duration of the emergency declaration unless ended sooner. See Fact Sheet: cvdvaccine-us.com/recipients.

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