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:
Several of the subsequent chapters and topics in the book will be familiar to gamblers and their experience of how they gamble.
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.
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”.
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).
Devin Pope and Maurice Schweitzer Is Tiger Woods Loss Averse? Persistent Bias in the face of Experience, Competition, and High Stakes (2009) Article here