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Ellen Goodman:

[…] The closed-minded hedgehogs are those who know &#8221-one big thing&#8221- and relate everything to that single, central vision. The open-minded foxes &#8221-know many little things&#8221- and accept ambiguity and contradictions. […] It&#8217-s no surprise that foxes are better at forecasting than hedgehogs. […] How then do we cultivate good judgment? Most Americans are probably hybrid creatures. In a fox-like moment, Tetlock advises that we listen to our own ambivalence as &#8221-we struggle to strike the right balance between preserving our existing worldview and rethinking core assumptions.&#8221- […]

Hal Finney:

[…] One of the psychological measures or metrics which Tetlock found was well correlated with expert accuracy goes back to a distinction introduced by Isaiah Berlin in his book, The Hedgehog and the Fox. I haven&#8217-t read that book, but based on Tetlock&#8217-s presentation, Berlin distinguished between two cognitive styles to which he gave these colorful names. The hedgehog is said to know one thing and know it well. He sees events and trends in terms of his big idea, and aggressively extends it into new realms. Hedgehogs tend to be confident in the applicability of their fundamental concepts and impatient with those who &#8220-do not get it&#8221-. Foxes in contrast know many small things which they bring to bear in their analyses in a dynamical and flexible way. They tend to be uncertain and flexible, &#8220-on the other hand&#8221- types who are skeptical about their own predictive ability and in fact about the whole enterprise of making predictions in such an intractable realm. […]

Daniel Drezner:

A hedgehog is a person who sees international affairs to be ultimately determined by a single bottom-line force: balance-of-power considerations, or the clash of civilizations, or globalization and the spread of free markets. A hedgehog is the kind of person who holds a great-man theory of history, according to which the Cold War does not end if there is no Ronald Reagan. Or he or she might adhere to the “actor-dispensability thesis,” according to which Soviet Communism was doomed no matter what. Whatever it is, the big idea, and that idea alone, dictates the probable outcome of events. For the hedgehog, therefore, predictions that fail are only “off on timing,” or are “almost right,” derailed by an unforeseeable accident. There are always little swerves in the short run, but the long run irons them out.

Foxes, on the other hand, don’t see a single determining explanation in history. They tend, Tetlock says, “to see the world as a shifting mixture of self-fulfilling and self-negating prophecies: self-fulfilling ones in which success breeds success, and failure, failure but only up to a point, and then self-negating prophecies kick in as people recognize that things have gone too far.”

I wanted to go back to this 2005 book from Philip Tetlock (Expert Political Judgment: How Good Is It? How Can We Know?) because I have been thinking of the big issue of last Tuesday (Should a betting exchange be a content provider, too?). My answer is: A betting exchange has no business being a content provider&#8230- except if the betting exchange can and will develop some very special content that the traditional media can’t or won’t provide, and that is of high strategic interest. You&#8217-ll spot that that&#8217-s the kind of twisted answers that the foxes would give. And I am wondering whether one could say that the hedgehog thinking (read it, the bad thinking) is in fact represented in the two other camps:

1. those who think that the betting exchanges have no business being content providers-
2. those who think that the betting exchanges should also be content providers.

The answer to this dilemma is, of course, &#8230- and if Mike Linksvayer is reading this blog post, he has already divined where I want to lead my readers with all this &#8230- the answer is, of course, innovation.

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Should BetFair have acquired TimeForm (the publisher of horseracing ratings, form guides and analysis)? Niall O&#8217-Connor (a betting market expert) thinks that there is a &#8220-strategic mismatch&#8221- between the two. I&#8217-m republishing his hatchet job, below. (I hope he won&#8217-t mind that I quote him in full, this time.)

At the end of November 2006 Betfair acquired Portway Press Limited, the owner of Timeform, the world-renowned brand involved in the publication of horseracing ratings, form guides and analysis. It was suggested at the time that the acquisition had cost Betfair somewhere in the region of ?15m.

At the time of the acquisition, Betfair announced that Timeform would retain full editorial independence, but that it would bring capital investment, technology, marketing and communication skills to the table.

On publishing its results for the year ended 30 April 2007, Betfair said that Timeform had &#8220-made a small loss in its first five months of trading after acquisition&#8221- but that it was confident that it would generate positive returns in the near future.

One can only speculate as to what the strategic thinking behind the acquisition was. Presumably it was believed that an association with the prestigious Timeform brand would make Betfair&#8217-s horse racing services more creditable- whilst at the same time affording cross-marketing opportunities.

Flawed logic at best&#8230-.

First, it is widely acknowledged that Betfair has given rise to, and nurtured, a culture of trading. Betfair traders do not typically run to form books, but rather, they let the Betfair market guide them, in the belief that it reflects all known information. (Betfair, with its lower transactions and information costs, provides its traders with a more realistic assessment as to the chance of longshots and the true probabilities of runners in a horse race- the favourite longshot bias is typically diminished, if not eroded).

Second, there is a strong case to be made that the incorporation of Timeform experts into Betfair&#8217-s horse racing radio service, has merely served to undermine the exclusiveness of the Timeform brand. Indeed, in situations where the Timeform expert&#8217-s selection fails to win, the brand is exposed to ridicule.

It is debatable whether the rather highbrow and serious research provided by Timeform, has any strategic fit with the Betfair trading culture. And one is therefore left to conclude that Betfair has not only misjudged the market for Timeform products, but also, demonstrated a serious lack of awareness of its own customers.

The hard truth of a failed plan is that the core values of the Timeform brand have been diluted through its association with a commercial betting exchange.

Hummm&#8230- I won&#8217-t make any comment on TimeForm (which I&#8217-m not familiar with). However, I will say this, generally speaking.

1. A betting exchange has no business being a content provider.
2. Except if the betting exchange can and will develop some very special content that the traditional media can&#8217-t or won&#8217-t provide, and that is of high strategic interest.
3. The difficulty, though, is that exchange executives and managers don&#8217-t have the first clue about how to set up and run a credible and popular media.
4. That said, it could well be that some exchange-sponsored or -run media projects will succeed &#8212-due to some highly talented project managers (the exception, not the norm).

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NEXT: Predictor Accuracy: the Hedgehog vs. the Fox