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According to a new study from John Hopkins University, gamblers are more likely to take risks and place big bets after winning several times. This is despite the fact that they might be facing long odds. This reflects the findings of the study that people start creating internal biases that influence how they make risky decisions. Gamblers usually take into account the most recent events and not look at the big picture.
The study by itself was pretty interesting. Researchers worked with subjects which had electrodes implanted in their brains. This was mainly done as a way to locate what part of the brain causes seizures but the data from the electrodes also gives researchers insight on brain activity during a variety of activities.
For this study, researchers had the subject play games involving bets on a computer. The game had an infinite deck of cards with five different values. They each had an equivalent chance of being dealt. The players were then shown two cards with one card revealed and one card hidden. Players were then asked to either wager low or high whether the revealed card’s value will be higher than the hidden one.
The card values were limited to two, four, six, eight, and ten. When presented with two, four, eight, and ten, players did not need much time to bet. However, six – which is the middle number – players halted and decided to base their wagers on previous results.
This is despite the fact that the previous results had no influence on the result.
In a statement, Sridevi Sarma, professor of biomedical engineering at the Johns Hopkins University Whiting School of Engineering said
The players are accumulating all the past card values and all the past outcomes, but with a fading memory. What happened most recently weighs on a person more than older events do
Past Performance Not A Safe Indicator
This dependence on past performance as a benchmark can be seen in financial investors as well. This is why a lot of finance managers warn that past performance is not a good guarantee of future results. The survey proves that it gamblers are likely to perform better if they ignored their recent wins when making fresh betting decisions.
The study comes out as a critical time as legalized sports betting is starting to grow in the United States. This new betting avenue is yet another way for American players to lose money if they are not careful with their wagers according to the study results.
A full paper on the study was published by Proceedings of the National Academy of Sciences.
