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They also found second-round draft picks were 72% more likely to be traded than first-round players, with the likelihood increasing by 3% with each incremental decrease in their draft order.
To be fair, both Staw’s and Camerer’s analyses of the NBA took place before the Moneyball era in sports, where decision-making became much more driven by analytics.
Although the effect sizes were diminished, they were still significant, replicating the original findings from the 1980s and 1990s.
Simply put, the status quo is the path you’re already on or the way you’ve always done things. The bias is that we have a preference to stick with those decisions, methods, and paths that we’ve already set upon, and a resistance
“status quo bias.”
“Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally.”
omission-commission bias.
we don’t really view the choice to stick with the status quo as a decision at
One of the most visible examples is how remarkably slow NBA teams have been to take advantage of the benefit of three-point shots.
Here are some of the other well-known and documented failing strategies that pro sports teams were slow to quit: always punting on fourth down in the NFL (instead of going for it); always attempting extra-point kicks after touchdowns (rather than two-point conversions); MLB teams positioning infielders in the traditional spots (rather than shifting); MLB teams bunting and stealing bases as an offensive strategy; NHL teams’ reluctance to pull their goalie earlier or when facing smaller deficits.
The rise and fall of Sears, Roebuck and Co. is well known, from the publication of the first Sears mail-order catalog in 1896 to its bankruptcy in 2018. For the first thirty years of Sears’s existence, it sold merchandise only through mail-order catalogs.
Two thirds of Americans lived in rural areas, with practically no access to mass-produced goods.
Sears was the first American retailing company to go public.
During the next two decades, annual sales tripled again, to $10 billion, as Sears became a staple and anchor tenant in hundreds of shopping malls throughout suburban America.
By the beginning of the 1970s, Sears was the face of American consumer culture. Its annual revenue was approximately 1% of the U.S. GNP.
In 1969, Sears announced plans to construct a new headquarters, which would be the world’s tallest building. In 1973, it completed the 110-story Sears Tower.
Yet, Sears did the opposite. It escalated its commitment to the retail stores and sacrificed everything else it owned to finance the fight. Why did this happen?
Part of the problem is the fact that you likely only know (or remember) Sears as a retail company. “Sears” and “retail” are synonymous.
Retail was their ...
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When it comes to quitting, the most painful thing to quit is who you are.
The well-known finding reported in When Prophecy Fails was that the other eight members were not willing to quit their belief in the prophecy, even though it was demonstrably false. To the contrary, the members actually escalated their commitment.
We want our identity to be consistent over time.
But what you need to understand is that we’re all in a cult of our own identity.
If Sears had sold off its retail business, that’s the moment it would have ceased to be Sears, at least the Sears that the public knew it as.
You don’t need to be world famous for these issues of identity to have a deep effect on your ability to cut your losses. This is true for everybody. When you say, “I’m a teacher,” or “I’m a coder,” or “I’m a doctor,” or “I’m a gamer,” you’re making a statement about who you are.
Adults ask children, “What do you want to be when you grow up?” We don’t ask, “What job do you want?” We are
Cognitive Dissonance
The desire to maintain a positive self-image contributes to the problem with quitting. When you quit, you’re closing a mental account, and we know that we don’t like to close those accounts in the losses.
This escalation seems to be clearly influenced by a desire to maintain internal consistency.
The irony is that this desire to be viewed as rational causes us to become less rational in the decisions we make.
As Katy Milkman, a professor at the Wharton School and author of the 2021 bestseller How to Change, along with John Beshears, now of the Harvard Business School, have demonstrated, when you stake out a position that is out of the mainstream, you are more likely to escalate your commitment in the face of disconfirming information.
Unlike Sears, Philips split into two companies and stuck with the part that was lesser known but offered greater expected value going forward. We know what the cognitive and identity-driven
Be picky about what you stick to. Persevere in the things that matter, that bring you happiness, and that move you toward your goals.
Quit everything else, to free up those resources so you can pursue your goals and stop sticking to things that slow you down.
When it comes to quitting, the most painful thing to quit is who you are. Our ideas, beliefs, and actions are part of our identity. When new information conflicts with a belief, we experience cognitive dissonance. To resolve the conflict, we can either change the belief or rationalize away the new information. Too often, we choose the latter. Dissonance can also result from new information coming into conflict with our past actions. We have a desire to maintain internal consistency, where our past beliefs and actions line up with our present beliefs and actions. We also want others to view us
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He sums up his philosophy in three words: Life’s too short.
Even for someone with Conway’s nose for value, only about 10% of the start-ups he invests in will make money. That means, by definition, that 90% of these ventures will fail.
Helen Keller said, “Optimism is the faith that leads to achievement.”
2020 book, Perfectly Confident,
A survey of three thousand entrepreneurs found that 81% of founders put their odds of success at 70% or better and a third of founders put their odds of success at 100%!
First, you should find at least one person to be your quitting coach. Second, you should try to serve in that role for the people you love.
When possible, divide and conquer. Have the people who make the decisions to start things be different from the people who make the decisions to stop those things.
Quitting is hard, too hard to do entirely on our own. We as individuals are riddled by the host of biases, like the sunk cost fallacy, endowment effect, status quo bias, and loss aversion, which lead to escalation of commitment.
The choice of how you allocate your time to finding new things or taking advantage of things you’ve already discovered is part of the classic explore-exploit problem.[*]
How much time should you spend exploring the landscape for new opportunities and how much of your time should you spend exploiting things that are already positive expected value?
whenever you’re pursuing a goal, there are always other opportunities you’re neglecting. You simply don’t see them because you’re not looking for them.
podcast “A Slight Change of Plans,”
The problem is that most of us never discover those other opportunities because we can’t see what we’re not even looking for.
In all these situations, the expected value of your path is not the same as when you initially chose
The ants strike the right balance between exploiting and exploring.
