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The Dunning-Kruger Effect and Why Daily Fantasy Sports Will Always Be Beatable
Poker players such as myself have long shared concerns regarding the future profit potential of the game we love. The nature of poker is that the game tends to get more difficult over time. This is not particularly surprising. Bad, losing players tend to be turned away while smart, winning players stick around and keep playing. Over time, the competition tends to get tougher which makes the game harder to profit off of. While poker and daily fantasy sports cannot be compared completely directly to one another, there are an awful lot of similarities. Like poker players, daily fantasy sports grinders might find themselves wondering if a time will come where the games are “solved” and impossible to profit off of. There is a psychological concept known as the Dunning-Kruger effect that can put these concerns at ease.
It’s reasonable to expect that certain daily fantasy sports players will “solve” the games just like some poker players have more or less figured out how to play completely optimally. People figuring out how to highly accurately handicap expected fantasy sports output is inevitable. In the same way that bookmakers have basically “solved” sports matchups between two teams by creating betting lines that are close to impossible to beat in the long run, so too will individuals create methods to predict expected fantasy sports output with a degree of efficiency that is impossible to compete against in the long run.
However, when this happens, it will not mean the end of daily fantasy sports. This is thanks to a cognitive bias identified by David Dunning and Justin Kruger in 1999. The Dunning-Kruger effect states that incompetent people tend to overestimate their own skill level while failing to recognize the clearly superior skill of others. This is the reason behind why nearly everyone thinks they are a good driver. Conversely, people with true ability tend to underestimate themselves. This is partially because humans have a tendency to assume that tasks which they found easy to complete must also be easy for others.
This cognitive bias is why people can still make money playing poker, why Vegas is able to take in tens of millions every year from people who inaccurately expect to have an edge on them, and why daily fantasy sports will be around for a long, long time.
In a study to test their hypothesis, Dunning and Kruger asked Cornell undergrad students to create a self-assessment of their logical reasoning skills, grammar skills, and humor. What the pair found is that people who scored in the bottom quartile on tests to determine their logic, grammar, and humor skills had estimated themselves to be in the 62nd percentile.
So for the skilled daily fantasy sports grinders out there who have figured out how to submit near-optimal lineups on a nightly basis and worry that it’s only a matter of time before everyone else catches on and starts submitting an identical lineup, fear not. There will always be lesser skilled players who erroneously evaluate their approach to creating lineups as above average. And as daily fantasy sports continues towards its inevitable destination of attracting more participation from the mainstream public, there will be an endless revolving door of these “legend in their own lunchbox” types who are certain that their approach to daily fantasy sports puts them in the upper echelon. But when everyone thinks that, some people are wrong and just don’t realize it.
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