Overreacting harms winning chances
How you react to a loss or a win speaks a lot about your chances of winning the next time, says a study.
Overreaction may lead to hasty adjustment and potentially abandoning a solid strategy, thus increasing your chances of losing the next time around, the findings showed.
Hasty adjustments actually backfire, resulting in about one extra loss per season per team, the study based on an analysis of two decades of data on NBA (National Basketball Association of the US) coaching decisions noted.
"To say 'a win is a win' ignores important information about the intensity of the win, causing losers to overreact and winners to be complacent," said Brennan Platt, professor of economics at Brigham Young University in the US.
None of the coaches in the sample demonstrated immunity to overreacting to close defeats.
Coaches also under-react to close wins - particularly in games that they expected to win by large margins.
The findings are particularly relevant to employer's evaluations of employee performance.
"You need to be careful to process all of the information. Things that are out of your control should be accounted for before you start evaluating staff," Platt added.
"The intensity of the outcome - by how far they missed the goal - should give you an indication of whether it was just bad luck," he added.
The study appeared in the journal Management Science.
(Posted on 22-07-2014)
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