The Dangers of Inside Information

Humans love to think they know something they are not supposed to know.  We love to gossip.  We may all go around claiming we don’t – and the societies we live in may allegedly reject it – but given the opportunity to find out who’s doing what, we find it hard to resist.


Finding unknown information

And our fascination in the affairs of others doesn’t stop with the coital. Any piece of previously-unknown information that’s dangled in front of us is like light to a moth; we are irresistibly drawn towards it.

Evolutionary scientists and anthropologists pin this predilection for private prattle to the way our species has developed. Living in small tribal communities as our ancestors did, it was crucial for us to understand the sexual and political alliances of those around us, especially if we hoped to gain power and the opportunity to procreate for ourselves.

Indeed, many academics offer this as the reason why primates have such large brains relative to their physical size (they are about six times larger than expected when compared to the brains of other mammals): the societies we evolved in demanded that we navigate complex social relationships, and we needed a brain that could cope with the intricate task of finding a mate, whilst avoiding conflict with our fellow tribes people, people who we relied upon for our safety and security.


What information is useful?

So, it’s little surprise that linguists claim that around two-thirds of our conversations concern the affairs of others. Gossip was the tool that allowed our genes to survive our evolutionary past, and our brains are thus innately primed to be on the look-out for, and rejoice in, new information that others may not know.

As we’ve seen elsewhere, though, the parts of our brain that have been left evolutionary hardwired with a particular bias can hinder – rather than help – as we navigate the modern world. Our insatiable desire for gossip, for example, perhaps explains why so many of us continually check our smartphones, desperate as we are for the release of dopamine that accompanies any social media interaction.

The scale of the challenge we face is huge. Anthropologists suggest that our biological evolution has primed us to thrive in communities of around 130 people. The tribes and villages of our ancient ancestors suited us perfectly, then. There was enough social information to satisfy our desire for it, but not so much that it overloaded us. Fast forward to an interconnected global village of over seven billion people, though, and we face a processing problem. What information is useful to us? What information is accurate? How do we decide?


Recognising wrong data

A microcosm of this wider human challenge is faced whenever we bet. Whereas once it felt as if information was scarce – what we knew about sporting events was limited to what was printed in the newspaper – the data we can now access is almost limitless: websites, Twitter feeds and Instagram provide a constant stream of evidence that can quickly become overwhelming, and impossible to sift successfully.

And as our brains are always on the lookout for information that others don’t know, we can often give too much credence to the wrong data.

In 2001, this unhelpful mental hard wiring initiated a series of punting decisions that still make me shudder nearly two decades later. A German horse, Silvano, had become somewhat of a globetrotter, winning races in Hong Kong and America. My punting friends – who weren’t as avid in their studies of the sport as I was – knew nothing about him. I had followed his career and had read on some obscure website that he was headed to the Cox Plate in Australia.

I developed a theory of breath-taking stupidity, based on a series of unfounded conclusions. First, I reckoned, Australian racing was not of the same quality as European racing, and so Silvano would easily dispatch of the likes of Northerly and Sunline.

Second, I reckoned, the Australian racing community would be so insular that they would immediately reject the chances of the tourist and offer huge odds, especially as he was coming from Germany, a lesser-light of the racing world. Third, I reckoned, I would be the only punter who would figure these things out, because no-one else was quite so studious a student of the sport as I was.


Picking the right Focus Areas

These reckonings led to a few weeks of feverish activity. Opening accounts with Australian bookmakers. Making complex and expensive international money transfers. Eagerly awaiting the moment when I would be able to fleece the ignorant Ozzie bookies. When I started the process, Silvano was a 16-1 shot. When accounts were open, money deposited, and I could eventual start placing bets, the odds had shortened to 9-1.

In fairness to me, by the off, Silvano was a 4-1 chance, so perhaps the bet represented value. But this wasn’t a carefully considered value-bet as part of long-term strategy to profit. This was a balls-deep all-in spin-of-the-wheel punt like none I’d placed before (or have since). This was a punt that would pay for a house.

Except it didn’t, of course. In New York at the time to watch the Breeders’ Cup, I was told about an illegal betting parlour in a dodgy part of the city that would be showing the race. Fearing for my life as I made my way there in the early hours, I watched the carnage unfold. Silvano was easily dispatched. Money that wasn’t mine was lost. It almost finished me.

And it all started because my brain got excited by information that it thought others didn’t know; it became obsessed by the social advantage it would bring. Other known-to-everyone information – like the form of the rival horses and the unique nature of the Moonee Valley track – was ignored and deemed worthless, when it should have been the sole focus of study.


Conclusion

Going on to work in the betting industry I saw many other punters make this mistake. Believing they knew something that others didn’t, they would act with that same feverish intent that I had in 2001, and it always led to calamity.

Keeping the details vague to protect the stupid, I knew a punter who laid a favourite for a big race because his stable-lad nephew told him the horse was lame. The punter racked up a six-figure liability, certain in his knowledge that the horse would not make the start. It turned out that a horse in the stable was lame, just not the big-race favourite, who went on to justify his favouritism a fortnight later.

Keep these cautionary tales in mind whenever you are assessing betting information. In our globalised world of data overload, we need to keep an eye on our cognitive filters. Primed to search for and obsess about what others might not know, we can often find ourselves valuing an off-the-cuff tweet above something more commonplace, when it’s the later that deserves the focus.

Next time I’ll examine the best ways to filter the information that comes our way, but in the meantime ignore gossip and tittle-tattle. It might have helped our ancestors get ahead in their parochial tribal villages, but it doesn’t help us become profitable punters in a global age of information overload.


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