Illusion of Knowledge

In 2015, Atir and Dunning, researchers at Cornell University, ran a series of experiments to investigate the phenomenon of “overclaiming”: the propensity of humans to believe they have knowledge of things that are false.


In one of the experiments, the researchers asked those who perceived themselves experts in personal finance to rate their knowledge of a series of technical terms such as inflation, home equity, and Roth IRA. Unbeknownst to participants, three bogus terms were also placed in the list.

The results of this study showed that those participants with the highest perceived expertise were most likely to claim knowledge of the made-up terms.

Similar studies have returned similar results and all fall within a branch of cognitive-bias study that can be called the Illusion of Knowledge: a human tendency to believe that we know more than we do.

It might be that this stems from a knowledge that we once knew things. If you did a degree in Physics, you might know that you once knew about relativistic mechanics. The fact that you have long-forgotten most of that knowledge does not shift your faith in your expertise.

This human tendency has potentially terrifying consequences in our dealings with professionals.  Lawyers, doctors, and financial advisors all work in sectors where the information upon which their judgements are based change over time – new legal precedents, new medical research, changes to tax laws – and, if those professionals have not had the discipline to maintain an up-to-date knowledge of those changes, they are likely to recommend – with confidence – courses of action that are, at best, sub-optimal and, at worst, fatal.

Any serious punter should be sceptical about the information they receive. If a trainer comes on television claiming a horse has been training well at home, we should treat that view with suspicion. How do they know?  What are they comparing it to? Are they telling the truth?

 



It is far more difficult as a punter, though, to view our own beliefs with the same level of scepticism. Take this example. Prior to a major tennis tournament, you look at data on second-serve points won, a key determinant of success in the men’s game. You find that Nick Kyrgios has been performing poorly in this area in recent weeks and this informs your decision to reject him as a likely winner. So far, so good. However, despite never going back to look at updated figures, you maintain a belief that Kyrgios has a poor second serve and it continues to inform your punting on men’s tennis. Ever done that?

Very few punters would be able to honestly answer “no” to that question.  We frequently establish beliefs about things – a draw bias at a racecourse, the propensity of a soccer team to concede sloppy goals, the middle-order batting weakness of a cricket team – and those beliefs are often based on reliable data. However, much like the doctor who fails to keep up-to-date with the latest medical research, we often carry that “knowledge” forward without continuing to confirm its validity.

Regulators around the world try to ensure that professionals are forced into updating their knowledge by requiring ongoing “professional development”. Depending on the methods used, this has varying degrees of success.

As punters, we need to learn from these attempts. The most successful professional punters have in place rigorous structures and processes which mean that they are acting on reliable and current data, and that they are making bets based on that data and not a personal (and probably false) belief about something.

Whilst maintaining large databases might be difficult for the average time-limited punter, we can at least be aware of our own cognitive shortcomings, and make a point of checking any knowledge we think we have, no matter how certain we are that we are right.


About The Author – Jack Houghton 

As a passionate sports’ fan and punter, Jack has written about sports and betting for over a decade, winning the Martin Wills Award for racing journalism in 2002 and writing Winning on Betfair for Dummies, first published in 2006 and now in its second edition, having sold over 35,000 copies in two languages.


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