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Below is an extract from an interesting chapter from a book on Intelligence Analysis published by the CIA (available online here <!– m –>https://www.cia.gov/library/center-for- … index.html<!– m –>)
What Chapter 5 asks is whether there is a point at which too much information, rather than adding to our ability to make effective judgements, actually makes us less effective. As part of the discussion they look at an experiment involving quantity of information in the context of horse-racing handicappers.
Makes for interesting reading and I’d welcome any comments.Here is the extract –An Experiment: Betting on the Horses
A description of one such experiment serves to illustrate the procedure.53 Eight experienced horserace handicappers were shown a list of 88 variables found on a typical past-performance chart–for example, the weight to be carried; the percentage of races in which horse finished first, second, or third during the previous year; the jockey’s record; and the number of days since the horse’s last race. Each handicapper was asked to identify, first, what he considered to be the five most important items of information–those he would wish to use to handicap a race if he were limited to only five items of information per horse. Each was then asked to select the 10, 20, and 40 most important variables he would use if limited to those levels of information.
At this point, the handicappers were given true data (sterilized so that horses and actual races could not be identified) for 40 past races and were asked to rank the top five horses in each race in order of expected finish. Each handicapper was given the data in increments of the 5, 10, 20 and 40 variables he had judged to be most useful. Thus, he predicted each race four times–once with each of the four different levels of information. For each prediction, each handicapper assigned a value from 0 to 100 percent to indicate degree of confidence in the accuracy of his prediction.
When the handicappers’ predictions were compared with the actual outcomes of these 40 races, it was clear that average accuracy of predictions remained the same regardless of how much information the handicappers had available. Three of the handicappers actually showed less accuracy as the amount of information increased, two improved their accuracy, and three were unchanged. All, however, expressed steadily increasing confidence in their judgments as more information was received. This relationship between amount of information, accuracy of the handicappers’ prediction of the first place winners, and the handicappers’ confidence in their predictions is shown in Figure 5.
Figure 5
ITEMS OF INFORMATION
With only five items of information, the handicappers’ confidence was well calibrated with their accuracy, but they became overconfident as additional information was received.
The same relationships among amount of information, accuracy, and analyst confidence have been confirmed by similar experiments in other fields.54 In one experiment with clinical psychologists, a psychological case file was divided into four sections representing successive chronological periods in the life of a relatively normal individual. Thirty-two psychologists with varying levels of experience were asked to make judgments on the basis of this information. After reading each section of the case file, the psychologists answered 25 questions (for which there were known answers) about the personality of the subject of the file. As in other experiments, increasing information resulted in a strong rise in confidence but a negligible increase in accuracy.55Paralysis Analysis comes to mind
I’ve ‘bookmarked’ the site for further reading…..Thanks.
The article says there were 8 ‘experienced’ handicappers….experienced in what way? losing? they have bus passes? reformed narcotic addicts ?
Just a wild suggestion….but maybe they didn’t understand the significance of /how to process the variables at their disposal and hence couldn’t accurately assign an accurate probability to each horses chances.
IMO if you have all the varables at your disposal and can process them ALL efficiently then you eventually end up backing every favourite because the betting market itself is actually very efficient due to the culmination of every single angle being covered by every single punter somewhere along the line. If one punter could process every single piece of information then they would merely end up with a tissue (where is Gingertipster BTW) which reflects the eventual SPs.
The returned SP’s don’t neccessarily reflect the fair odds line of every horses chance in the race, there are generally inefficiences in the market
If you were able to accurately process every given variable, however significant or insignificant, present in the environment of a horse race, and could then deduce a true odds line that was statistically accurate to 95% for a sample size of say 10,000 races…..well,you would be very good..
Its not how much or how little information you use. What is important is whether the overall market is factoring the same information as you are.
I think there is something in it. I think there is certain key information which will help you beat the market and that as the info gets less key then the analysis yields less and less until a point where additional info adds no further value.
The important thing, as Cav points out, lies in deciding which bits of info or which variables give you an edge over the market. As DB asserts, it’s not much good using teh same info that the majority use as that would lead you to the same place as they end up (i.e. your assessment of the probabilities would match theirs and you wouldn’t be able to identify your edge).
So, what five bits of info would you say are not adequately factored into the market?
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You can never have too much information. However the alchemy is in how much weight you give to any one piece of information over another.
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So, what five bits of info would you say are not adequately factored into the market?
for the flat 2 from me
1)Number of runs is one that doesnt get enough notice.
2)how the first – second furlong was run in the previous start (horse either getting a good possy due to false pace or else getting in a bad possy due to huge pace out of the stalls from rest of the field).An example….using 2 different types of rating.
A rating consisting of 1 factor only, collateral form, lets use the Racing Post Rating. All top rated over the last few years would have led to approx. 15% loss at level stakes at SP.
Now lets use a rating composing of many factors, going, draw, form, weight, jockey, trainer, etc.. lets use the Adrian Massey top rated. All top rated at SP over the last few years approx. 10% loss at SP.
Both ratings are widely available in the public domain, both show a loss despite being compiled very differently.
Having 1 piece of information or 10 pieces of information is irrelevant. Whether other people have them is what’s key.
Its not how much or how little information you use. What is important is whether the overall market is factoring the same information as you are.
Whats important is your ability to make an accurate set of probabilities from this information and also the efficiency of the market.
Your success is dependent on your mathematical expectation.E(x) = ODDS x P(W) – P(L)
Expectation = Odds multiplied by your probability of winning minus your probability of losing
All systems converge to a single bet expectation. It is mathematically impossible to discover a betting method that will overcome a negative expectation
The returned SP’s don’t neccessarily reflect the fair odds line of every horses chance in the race, there are generally inefficiences in the market
Obviously the market in any one specific horse race may not reflect the true odds but, in general, the market is very very efficient.
eg – approx 25% of all 3/1 shots etc
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Your car has a fault; the first garage you go to spends half an hour explaining in great technical detail what’s wrong with and how laborious and complex it is to fix it; the second one tells you it’s a simple problem and one they dealt with dozens of times – where would you have your car fixed?
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(where is Gingertipster BTW)
.Apparently, he was found strangled in the toilets of his local bookmaker.
The only clue police have to his assailant is a couple of smudged fingerprints found on the table of odds stuffed in the victim’s khyber.
I’ll get my coat.
This is not a new premise and it makes perfect sense to me.
I’ve always found the best bets to be the easiest and most instinctive and the worst to be those occasions where I’ve sweated buckets to find a bet and have therefore forced it. The hard thing is having the patience to wait for the right opportunities.I think quality of info is important. Where does it come from and how many other people are privy to it?
Zip
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It certainly isn’t a new premise that you
can
have too much information. Ockham’s Razor for instance, a principle which states just that, dates back to the 14th Century.
Gerd Gigerenzer, in his book ‘Gut Feelings’ also comes to the same conclusion, and cites various instances of medical practitioners making better diagnoses with fewer variables, the man in the street outperfoming top-line financial advisors on no more than instinct, etc. etc.
It isn’t the amount of information – we’ve all been there, collating and researching reams of minutiae in the hope of weaving complex patterns to give us a slight edge over the crowd, only to discard it and chase down another blind alley over different tiny detail – but how you process the few bits of information that regularly have a major impact on the outcome.
I’ve had more years in this game than most, and spent many of them chasing the rainbow that the accumulation of knowledge that others don’t have holds the key. I am now firmly convinced that is the wrong approach, and the real edge lies in how we use a few fundamentals that are available to everyone. Much as we like to think it’s an intellectual pursuit, simple really is, in this case, beautiful.
Imo, of course.
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