Information Cascade and A Night Full of Disappointment
During the past weekend, the last 4 countries that are going to play in the EURO 2012 European Championship were determined. The 8 runners-up in the qualifying stage played two-legged playoffs against each other and the 4 winners qualified: Portugal, Croatia, Republic of Ireland and Czech Republic. Since I am Turkish, I have been following the Turkey-Croatia games. Whoever scored more goals in the two games was going to get to qualify to EURO 2012.
The way these games work is the players of each country gather together about a week before the first game, they have 5-6 practice sessions (at most one on a day), they play the first game, have one more practice session and play the second game. While these practice sessions are going on, the authors from different newspapers visit the practice sessions and make predictions about how the games are going to turn out. They make these predictions based on what they observe in the practice sessions regarding how motivated the players are, their morale and the performance they show in the practice sessions. If one country is obviously stronger than the other, the stronger country is usually favored in these articles that these authors write and there is usually no debate as to who will win. However, if the countries are similar and one is slightly stronger, than these observations come into play and they play an important role. After the articles are written, the betting companies release their official odds for all of the games. They mostly rely on these articles; if most of the authors say that, say team A, will probably win, then the declared odds for team A is low because they are likely to win.
The Turkey-Croatia games turned out to be very interesting. A group of authors visited the first practice session of the Turkish national team. The next day, newspapers were full of articles that say how well the players’ morale is and how devoted the players are for the upcoming game. In this case Turkey is the slightly stronger side and this fact was also not conflicting with what the authors observed. The next day, another group of authors visited the second practice session and the setting was not really that different according to the authors. The headers were along these lines: “These lads really do believe that we’re going to make it…”, “Croatia should fear us…” Different group of authors visited the practice sessions the following days and their opinions in the articles were not really that different. As a result, the bet companies declared the odds for Croatia as 1 to 3 (if you bet 1 Euro and Croatia wins, you get 3 Euros back) and declared the odds for Turkey as 1 to 1.2.
November 11th, the game night: Everybody thinks Turkey is going to crash Croatia and beat them with such a high score that the second game won’t even matter. The 50,000 people in the stadium, the commentator, everyone is confident. No one knows how confident and motivated the players actually are. No one knows what they think.
The game starts. We are just two minutes into the game and Croatia scores! A huge silence in the stadium…Everyone is shocked. People get over it and think that Turkey will score and put it back to level. 30th minute Croatia scores again. The second half starts and 5 minutes into the second half: 0-3! People start to leave the stadium. Turkey loses and Croatia qualifies.
But what happened to make everyone, literally everyone except the players and the staff to think that Turkey was going to win this game. One very likely explanation is information cascade. The first group of authors saw the players motivated and determined. The second group of authors saw them and the players were not doing bad in the second training session either and so the authors wrote optimistic predictions. As days passed, the team’s motivation and morale descended but the different groups of authors, having two high signals, disregarded what they saw in the training camp on the 4th, 5th and 6th days and just chose to write similar things even though they saw that the players are not doing well at all. They assumed that this decreased motivation was a one day thing. It could also be that the players were motivated and determined all along and then decided to not run on the field on the match day but this is very unlikely. This information cascade resulted in millions of people being disappointed on November 11th.
We will watch Croatia in EURO 2012. They better do well!