“Between the Chiefs, Bucs, Packers and Bills there’s a fifty percent chance of one of those four teams winning the Super Bowl. In other words, you can have those four teams or the other twenty-eight in the league.” – Cade Massey, Wharton Moneyball, August 2021
Take the other twenty-eight! This idea holds in both sports and investing.
One potential bit of mental muck is what we can call Visibility. It is easy to imagine a specific thing happening rather than a range of things happening. Visibility is part-of-the-reason counterfactuals and postmortems are difficult to conduct. That three of the four quarterbacks have in fact won a Super Bowl makes this effect more so. I can ‘see’ one of these quarterbacks winning the big one, but that doesn’t provide helpful information.
Not so fast though.
What is ‘the field’? As Tim Harford wrote, it is as often the words as the numbers which cause confusion (life expectancy for instance). In the case of the NFL, it’s the twenty-eight other teams that might win the Super Bowl.
But is that right? Can every other team win the Super Bowl? While on “any given Sunday” any team might win, stringing together a group of wins to be champion is far less likely.
The central point to Zeckhauser’s Maxims is that reframing a situation may cause our conclusions to change. We used this framework to ask: Was the Ohio Vaccine Lotta a Good Idea? What if we reframe the question around Super Bowl favorites then?
Roughly speaking there are three groups: the Favorites (4 teams), the Chasers (X), and the No Chancers (Y). Now how many Chasers and No Chancers there are is questionable, but the framing changes our thinking. If this is the structure then the relevant idea isn’t the field but a subset of the field: the Chasers. If there are 4 Favorites, 4 Chasers, and 24 No Chancers then the choice changes. Take the favorites. What if there are 4 Favorites, 8 Chasers, and 20 No Chancers? The top twelve preseason favorites have won 85% of the previous 20 Super Bowls.
There’s no definite answer to this Favorites, Chasers, and No Chancers structure but the framing does change how we think about it.
Another mental model is the same mindset we used “Tracking Tom“. The idea there was that there’s more downward variance than upward variance. The same idea holds for the Bucs, Chiefs, Bills, and Packers: those teams are more likely to underachieve. Put another way, it’s more likely that something goes wrong (someone’s quarterback underperforms) than right. The Chiefs and Bills, for instance, both notably outperformed their 2020 Pythagorean figures.
“Uncertainty is generally underestimated,” said Adi Wyner, “and that means that the field collectively have a little bit more probability than you might assign to four teams.” The data agrees. Take the field.