Can Losing Lead to Winning?

/Can Losing Lead to Winning?

Can Losing Lead to Winning?

By | 2017-08-18T17:08:25+00:00 March 20th, 2016|Research Insights, Behavioral Finance|1 Comment

Can Losing Lead to Winning


Individuals, groups, and teams who are behind their opponents in competition tend to be more likely to lose. In contrast, we show that through increasing motivation, being slightly behind can actually increase success. Analysis of more than 18,000 professional basketball games illustrates that being slightly behind at halftime leads to a discontinuous increase in winning percentage. Teams behind by a point at halftime, for example, actually win more often than teams ahead by one, or approximately six percentage points more often than expected. This psychological effect is roughly half the size of the proverbial home-team advantage. Analysis of more than 45,000 collegiate basketball games finds consistent, though smaller, results. Experiments corroborate the field data and generalize their findings, providing direct causal evidence that being slightly behind increases effort and casting doubt on alternative explanations for the results. Taken together, these findings illustrate that losing can sometimes lead to winning.


This paper highlights that being behind at halftime (in basketball) actually increases the probability of a team winning. The figure below from the paper, shows the simple probability of winning the game based on one’s halftime score.

Can Losing lead to winning fig1

The authors state:

“Our findings also speak to the ongoing debate about whether psychological biases persist in market settings… These findings have important implications for incentive design and motivating employees and others. Rather than giving people the full distribution (i.e., how they did relative to everyone else), telling them about their performance relative to the person directly in front of them should encourage everyone to work harder.”

Whether this applies outside of basketball is unclear.

Let us know what you think.

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About the Author:

Jack Vogel
Jack Vogel, Ph.D., conducts research in empirical asset pricing and behavioral finance, and is a co-author of DIY FINANCIAL ADVISOR: A Simple Solution to Build and Protect Your Wealth. His dissertation investigates how behavioral biases affect the value anomaly. His academic background includes experience as an instructor and research assistant at Drexel University in both the Finance and Mathematics departments, as well as a Finance instructor at Villanova University. Dr. Vogel is currently a Managing Member of Alpha Architect, LLC, an SEC-Registered Investment Advisor, where he heads the research department and serves as the Chief Financial Officer. He has a PhD in Finance and a MS in Mathematics from Drexel University, and graduated summa cum laude with a BS in Mathematics and Education from The University of Scranton.

One Comment

  1. Steve March 20, 2016 at 9:00 pm

    Stretching to find something, but what came to mind was one study that apparently found that the (short-term) loser stocks in the winning sector/industry do better as a short-term reversal trade. That might be a case of being a bit behind one’s peers?

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