Decisions, Decisions: Understanding the Gambling Mind
Lorien Pilling, Head of Research, Global Betting and Gaming Consultants
Global Betting and Gaming Consultants used the Christmas break to read Daniel Kahneman’s Thinking, Fast and Slow. Kahneman is a psychologist whose work focuses on the psychology of decision making and judgement. In 2002 Kahneman was awarded the Nobel Prize in Economics for his development of prospect theory. Thinking, Fast and Slow sets out the author’s “current understanding of judgment and decision making, which has been shaped by psychological discoveries of recent decades”. The book is essential reading for anyone who takes their gambling seriously.

One of the central themes of the book is the metaphor employed by Kahneman to explain the human brain’s different modes of thinking. He talks of System 1 and System 2: 

System 1: “operates automatically and quickly, with little or no effort and no sense of voluntary control” 

System 2: “allocates attention to the effortful mental activities that demand it, including complex calculations. The operations of System 2 are often associated with the subjective experience of agency, choice, and concentration”
Several of the subsequent chapters and topics in the book will be familiar to gamblers and their experience of how they gamble. 
One section is titled “The Illusion Of Pundits” and will strike a chord with gamblers who listen to the racing pundits or even jockeys and trainers. Kahneman writes: “Everything makes sense in hindsight … And we cannot suppress the powerful intuition that what makes sense today was predictable yesterday. The illusion that we understand the past fosters overconfidence in our ability to predict the future”.
The concept of the sunk-cost fallacy will also be painfully familiar to gamblers who have persisted with a poker hand longer than they should, or continue to back a particular horse/team because of previous losses incurred in backing it: “the decision to invest additional resources in a losing account, when better investments are available, is known as the sunk-cost fallacy, a costly mistake that is observed in decisions large and small”.
Kahneman frames much of the discussion in terms of ‘gambles’ and ‘taking risks’ but does not deal with sports betting or the psychology of gambling specifically. 
But in a chapter on rare events he does discuss the psychology of lotteries and lottery players. “The thrilling possibility of winning the big prize is shared by the community and reinforced by conversations at work and at home … the actual probability is inconsequential; only possibility matters”.
The author argues that highly unlikely events are either ignored or given too much prominence (‘overweighted’). “Overweighting of unlikely outcomes is rooted in System 1 features … Emotion and vividness influence fluency, availability, and judgments of probability – and thus account for our excessive response to the few rare events that we do not ignore”. 
One fascinating study that Kahneman recounts might be of particular interest to those who bet on golf. Economists Devin Pope and Maurice Schweitzer (University of Pennsylvania) used professional golfers to study ‘loss aversion’ – the idea that humans are driven more by the desire to avoid loss than achieve gains.
Pope and Schweitzer studied more than 2.5 million golf putts to test the theory that a golfer would try harder when making a par putt (i.e. to avoid making a bogey and lose a shot) than when putting for a birdie (i.e. to gain a shot). 
Their research concluded that golfers were indeed ‘more successful when putting for par than for a birdie’ and the difference in the rate of success for these putts was 3.6%. 
Reading Thinking, Fast and Slow will help gamblers understand the lazy ‘tricks’ their brain plays on them in the decision making process. Understanding these processes will not guarantee finding more winners but it might help prevent throwing money away on those lazy, ill-considered bets that eat away at your betting bank. The only downside of reading this book could be that the increased self-awareness of your cognitive processes leads to an inability to make a decision. The continual analysis of your judgements could lead to a form of ‘gambling yips’ and a lack of confidence in putting any money behind your conclusions. 
Daniel Kahneman Thinking, Fast and Slow (2011) Penguin Books
Devin Pope and Maurice Schweitzer Is Tiger Woods Loss Averse? Persistent Bias in the face of Experience, Competition, and High Stakes (2009) Article here