Is it Better to be Great or Potentially Great?

Would you go for the established star (LeBron) or the potential star (Davis)?

Given the choice between a rookie — who seems like he will become an excellent player, but isn’t yet — and an established player — who currently is an excellent player — which would you choose? Paradoxically, if you are like most people, you’d probably go for the rookie. In a series of studies, Zakary Tormala, Jayson Jia, and Michael Norton discovered that people prefer potential for success over actual success.

In fact, one of the studies performed by Tormala, Jia (who are both with Stanford), and Norton (who is with Harvard Business School) actually had study participants pretend to be an NBA GM and to choose how much money to offer an imaginary player. Given five years of made up statistics, participants were told that either:

  • the player had earned these statistics during five years of professional experience; or
  • the statistics were a projection of what the player was capable of doing in his first five years in the league
Participants who were told that the numbers were projections ended up offering more money on average — $5.25 million for those who were told that the numbers were projections, compared to $4.26 million for those who were told that the numbers had been earned. They also believed their player would score more points and would be more likely to make the All-Star team than those who were told that the statistics had been earned.

Remember: in both cases the numbers were identical — the only thing that was different was the way in which they were described.

Tormala, Jia, and Norton also performed similar studies involving the evaluation of job candidates, art and artwork, chefs and restaurants, and comedians. In each case, potential for success was deemed more desirable than actual success.

Choosing someone with potential over someone who has a record of success is clearly a poor strategy. But humans find potential more interesting because it is less certain. Let me quote Heidi Grant Halvorson (who, incidentally, is my source on the studies, since the research paper is not available for free online):

When our brains come across uncertainty, they tend to pay attention to information more because they want to figure it out, which leads to longer and more in-depth processing. High-potential candidates make us think harder than proven ones do. So long as the information available about the high-potential candidate is favorable, all this extra processing can lead (unconsciously) to an overall more positive view of the candidate (or company). (That part about the information available being favorable is important. In another study, when the candidate was described as having great potential, but there was little evidence to back that up, people liked him far less than the proven achiever.)

This might help to explain why owners, GMs, coaches, and fans prefer high draft picks and draftees over proven players. Or why, from 1995 to 2005, NBA teams increasingly opted for high school players over their more proven college peers, until the NBA stepped in and required that NBA draftees be 19 or older (and at least one year removed from high school).

Remember research this the next time your favourite team trades an established star for an up-and-comer and/or some cap space. Like decision makers everywhere, NBA GMs are only human, and are prone to irrationality and bias just like the rest of us. Knowing this is half the battle!

- Devin

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