Hello to those still in the office! Two Stanford GSB researchers analyzed ball-and-strike decisions (1M+ calls!) from Major League Baseball umpires to determine how their decisions were affected by various factors, most notably the impact that any one decision would have on the current expected outcome of the game.
What did they find? They found, generally, that umpires are impact averse, namely they err on the side of making decisions that preserve the status quo, in this case the existing expected outcome of the game.
What this means is that if a calling a strike in a pivotal moment will have an effect proportionally less than that of calling a ball, an umpire is significantly more likely to do so, and vice versa – the researchers describe this as umpires being willing to “shrink or expand the strike zone as a function of the disparity in the consequences of their options, ball or strike.” Turns out that this bias was also stronger for breaking pitches (i.e. curveballs), then they were for straight pitches (i.e. fastballs).
Perhaps most interestingly, the impact aversion phenomenon can up to 4x stronger for nationally-televised games vs. those that are televised locally.
So, what does this mean for us when it comes to decision-making processes? Well, our friends at Irrational Labs (irrationallabs.org) suggest that we need to make sure that we don’t play it too safe when there is time pressure or external pressure. So, if you have a deadline, make sure that deadline is real and not imposed. And, as a company, we need to continue to encourage each other and our teams to take risks even when the stakes are high.
Can you guys think of times when you’ve fallen into the impact aversion trap? Even though we talk about our launch and iterate culture, I know that I’m susceptible to playing it safe when the risks seem high sometimes.