There's a link between Olivier Giroud and the financial crisis: both show the importance of reputation.

Yesterday, Giroud both missed horribly against Stoke and scored a good goal. To his detractors, the miss is evidence that Arsenal can't win the title with a second-rate striker. His fans, by contrast, look at the goal as evidence that he is good enough. What both are doing is seeing his performance through the prism of their priors; if you think Giroud is mediocre, you focus upon his shortcomings but if you like him you see his merits*.

This is how reputations are built. If you have a good reputation, a mix of the framing effect and confirmation bias means that people will read ambiguous evidence as compatible with that reputation. And if you have a bad reputation, they'll interpret the same ambiguous evidence as consistent with you being a duffer.

Reputations, though, are assets and assets can be exploited; as the old saying goes, "give a man a reputation as an early riser and he can sleep til noon."

One of the best examples of this in sport was Shane Warne's later career. His reputation as a magician so bamboozled batsman that he could take wickets even with ordinary straight balls.

A similar thing happens in music; a reputation as a great artist allows some performers to make self-indulgent albums: think of the more, cough, challenging music of Lou Reed, Prince or Scott Walker.

Conmen know this. One of the oldest frauds is the confidence trick. You win the confidence of the mark, for example, by repaying small loans with interest and then use this reputation as a good borrower to borrow a fortune and run off with it.

In Phishing for Phools, George Akerlof and Robert Shiller call this reputation mining:

If I have a reputation for selling beautiful ripe avocados I have an opportunity. I can sell you a mediocre avocado at the price you would pay for the perfect ripe one.

This, they say, is just what ratings agencies and investment banks did in the 00s. They used their good reputations to give high credit ratings to bad securities, thus passing off bad avocados as good ones.

Such behaviour isn't, though, confined to the financial sector. Luigi Zingales and colleagues have estimated that around one-in-seven US companies might be defrauding their shareholders by bosses' exploiting their reputations for trustworthiness.

The problem here, though, isn't simply outright dishonesty. Even wholly honest corporate bosses and fund managers use inflated reputations for excellence to earn big salaries and fees. And companies can profit - for a while - by selling inferior goods under a good brand name: its critics claim that this is what has happened to Cadbury's chocolate.

My point here is that exactly the same processes that we see among football supporters - a tendency to use cognitive biases such as Bayesian conservatism and the confirmation bias to build reputations which aren't always proportioned to evidence - also exist in economics, and sometimes with unpleasant effects. Economics and sport have much in common; in fact, I regard Matthew Syed and Ed Smith as our best economics journalists.

You might think all this just shows the dangers of having strong prior beliefs about people's competence and trustworthiness.

Maybe. But there are dangers in not having priors. There's a rare phenomenon known as the Capgras delusion, whereby people believe their close relatives have been replaced by impostors. When psychiatrists quiz such patients, they often reply along the lines that such events are indeed improbable but they must believe the "evidence" of their own eyes. To such patients, more faith in their priors - that people don't get replaced by impostors - would enhance their psychological health.

Good judgment requires us to hit the happy medium, putting neither too much nor too little weight upon our priors.It's because this is so darned difficult that costly cognitive biases are so ubiquitous.
* In fact Giroud's goals-per-game ratio, at 0.42, whilst less than that of the best strikers, is comparable to that of some lauded ones such as Carlos Tevez and Didier Drogba (and, ahem, Emmanuel Adebayor).