Why Owners are worse than they think they are

Posted on November 17, 2011 by

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I was watching a great talk from Christopher Chabris, author of The Invisible Gorilla and Other Ways Our Intuitions Deceive Us. As with other scientists who study the brain, he revealed our brains may not work as well as we think they do. Some of his points actually explain how NBA management, despite being full of successful business people and former players, can be as bad as it is. It breaks down to two simple truths:

  1. We’re bad at judging our own abilities
  2. Being good at one thing does not mean we’re good at everything.

We’re Bad at Judging Our Own Abilities

Check out the video at 42:30 to see the specifics on this.

When analyzing basketball players a common theme comes up. People say it is hard to get a real objective measure of a player because of different variables and intangibles including:

  • Clutch
  • Leadership
  • Different Teams
  • Defense
  • etc.

While I feel that these factors are overestimated, it’s true that basketball is not played in a vacuum.  Let’s consider instead the gold standard of rating systems: chess. Chess is a one-on-one game. The rating system adjusts for your skill and the skill of your opponents and estimates your odds of winning against any given opponent. In short, the chess rating system is what we dream of when we look at pro sports. So what happens when you ask chess players about this perfect in a vacuum rating system?

They estimate that they are twice as good as they really are!

Yes, when you ask chess players to rank themselves, it turns out that they think they would win against themselves twice as often as their rating says. This feature of human cognition is especially important in a competitive field: most management thinks they are better than they really are. This explains how so many can be upset at their inability to win or make money–they think they should be making more or winning more because they aren’t good at judging themselves. Dave Berri has also pointed out that former players when given management roles may overvalue their old skills and look for similar players (with disastrous effects)

Good at One Thing Does Not Mean Good At Everything

Check out the video at 44:00 to see specifics on this.

Chabris performed an experiment in which participants were asked to draw a diagram of a bike. Many people failed miserably at this. More impressive was that even the people who rode their bike every day still had problems with the task. Likewise, players might assume that because they played ball for ten years they’ll be good at management. Owners might assume because they ran a successful company that running a team will be easy. But all the evidence indicates that it just doesn’t work that way. Being an expert at one aspect of something does not mean you’ll be great at related but different tasks. What’s worse is that your experience will cause you to overrate your skills in the related field!

Why This is Bad

These problems are not unique to chess players or NBA owners. The general trend in behavioral economics is that we have many flaws that prevent us from acting rationally. Normally when people are bad at judging their abilities it’s not a problem. If a chess player says they are twice as good as their rating it doesn’t mean they win more often. If an avid bike rider tries to get a job as a bike mechanic they’ll probably be shown the door without more training. However, with the owners things are different. When they fail, rather than leave, they have the option of being destructive. They can lock out the league and demand rule changes that may be detrimental in the long run. So the lesson is that we shouldn’t let the people making the decisions also be the people to judge those decisions. Unfortunately in the NBA that is exactly what has happened and as a result we all lose.

-Dre

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