Table 2: Success Rate Of Goalkeepers Stopping Penalty Kicks
Altogether, goalkeepers succeeded in stopping 42 penalty kicks—14.7% of all the kicks that were examined. The overall success rate of stopping penalty kicks is very low and most kicks result in a goal being scored. The left column shows that there is no connection between the success rate in stopping the kick and the direction of the kick. The success rate is very similar regardless of the direction of the kick.
On the other hand, an analysis of the 42 successes (shown in the right column) shows that the success rate of staying in the center (e.g., doing nothing) is more than double than the success rate of jumping to either direction.
Thus it seems that the decision made by the goalkeepers in 94% of the cases—to jump either to the right or the left—was not rational, since it decreased their chances of stopping the penalty kick.
Why does it happen? The researchers provide the following explanation:
The researchers call this behavioral phenomenon an "action bias."
What can we learn from this research on the behavior of investors during a bear market?
When the market goes down, investors start to see losses on paper that cause them a significant mental pressure. The future direction of the market is uncertain and investors have to make decisions that will have a significant impact on their well-being in the future.
Is the massive sell-off of equities during a bear market merely a result of investors' action bias? An emotional reaction to a difficult situation that makes them "do something," while rational analysis likely suggests doing nothing?
It seems to me that the answer to this question was given by Benjamin Graham in his book "The Intelligent Investor":
Elli Malki is an economic consultant and the editor of http://www.inbest.co.il/, an Israeli Web site that provides a decision support service for savers and investors. He can be reached at [email protected].