During the recent HBO special “24/7: NHL Road to the Winter Classic”, Washington Capitals GM George McPhee was interviewed during the Caps losing streak and amidst media scrutiny. He defended his club by something to the effect of “if they (media) knew anything about the game, they’d be in it”.

It’s a plausible argument on its face – people who are skilled in hockey would likely make living at it. On the other hand, McPhee’s assertion is a classic appeal to authority: the fallacy that a statement’s truth or falsehood can be judged by the authority of the speaker. Reality, however, is no respecter of titles. Furthermore, outsiders can sometimes offer a different, unique perspective that can aid even established experts.

In an essay entitled “Inside-Out Perspective” Baseball stats guru Bills James wrote:

“I’ve never said, never thought,” James wrote in the essay, “that it was better to be an outsider than it was to be an insider, that my view of the game was better than anyone else’s. It’s different; better in some ways, worse in some ways. What I have said is, since we are outsiders…let us use our position as outsiders to what advantage we can. Let us back off from the trees, look at the forest as a whole, and see what we can learn from that.”

There’s many reasons outsiders may see “the forest for the trees” as James puts it. For example, None of “us” have to deal with the pressures or incentive structures that afflict coaches and general managers in the NHL. For example, a goalie’s win/loss streaks may be at the mercy of variance or the goal support he receives, but the coach who doesn’t act on results and pull a losing starter in favor of the back-up runs the risk of being reprimanded or fired. As a result, “riding the hot hand” becomes a norm in hockey culture, frequently practiced by the authorities and experts…despite the fact that an outsider like Gabriel Desjardins can show coaches are mostly just reacting to dumb luck when they do it. The perception and incentives run counter to the rational argument for the NHL coach, so the technically irrational approach becomes normative.

Another issue for “insiders” is, ironically, their access to the players due to something call “the dilution effect”. The dilution effect is the tendency for neutral or irrelevant information to skew a judgment. I discussed this bias in my Limits of Observation article, but it bears repeating: non-diagnostic info can weaken or dilute the impact of relevant data. In this sense, it’s possible that knowing a lot about a hockey player can mean knowing too much - for example, being aware of a guy’s eating habits, favorite films and taste in music can actually hinder rationally judging his abilities as a hockey player. That, of course, isn’t a problem for the reasonable outsider. All we have to go on is his play on the ice and the manner in which he intones cliches during interviews.

Falsehoods or sub-optimal strategies can also be perpetuated via an information cascade, which is a dressed up name for a “fad”. The technical definition of an info cascade is when people observe the actions of others and then make the same choice that the others have made, independently of their own private information signals. This tends to happen a lot in the NHL, particularly after the Stanley Cup is awarded; every year there is a new “model” of team building posited based on the characteristics of the championship squad. Fads can actually be useful signals when the crowd gets something right – the well worn path is usually easier to tread for a reason – but can descend into irrational “herd-like” behavior when it becomes blind conformity to some norm. The pressures to conform to such fads is greater on the “inside” because of social influences and the need to succeed (or at the very least, be perceived as trying to succeed). Outsiders, on the other hand, can observe and test the assumptions of a given fad without fearing significant reprisal.

None of this is to say authorities or insiders are blindly devotional to convention or mere puppets on the strings of incentive structures. After all, NHL GM’s and coaches tend to get a lot right and hold their positions for good reason (with a few exceptions). There are also obvious informational advantages to being on the inside as well, dilution effect aside. As James notes in the quote above, the insider/outside perspectives are different and both offer advantages and disadvantages to the other. The trick in either case is to separate the good information/arguments/strategies/analysis from the bad.