When I was looking up information for my
last blog I stumbled upon something else which was interesting. Yes, it was also
connected to gambling in casino’s but covered another aspect of losing, losing
money in general. In gambling, there are a lot of interesting irrational
behaviors, behavior from which we can learn in the business life.
The first one being the “Gambler’s Fallacy”, which is the wrong assessment of possibilities. I found myself subject to this at the roulette table. Next to the table most casinos have a screen with the last outcomes. And if you like it or not, you will always look at the last outcome and base your decision on that. You’ll think it matters but the chance of winning will just stay the same, around 47%.
Another one of weird behavior is the “almost got it” or “near miss”. It has been found that players don’t react with disappointment to a near miss, but with excitement, increased betting and more persistent play. This “near miss” phenomenon can also be translated to different areas, such as soccer. A player will react differently to a shot which goes in the third ring, then to a shot which hits the post or the crossbar. Both efforts are a miss, but the player will get more confidence from hitting the post than from hitting the third ring. So, why do we react in this way?
In the case of the soccer example, the near miss most of the times gives confidence. This confidence will afterwards translate into a better performance and will result into more goals. However, when gambling the chances stay the same, a near miss will never increase the chance of winning. The only thing it might do is give you more confidence that you’ll win, such a shame you don’t have it in your own hand.
The first one being the “Gambler’s Fallacy”, which is the wrong assessment of possibilities. I found myself subject to this at the roulette table. Next to the table most casinos have a screen with the last outcomes. And if you like it or not, you will always look at the last outcome and base your decision on that. You’ll think it matters but the chance of winning will just stay the same, around 47%.
Another one of weird behavior is the “almost got it” or “near miss”. It has been found that players don’t react with disappointment to a near miss, but with excitement, increased betting and more persistent play. This “near miss” phenomenon can also be translated to different areas, such as soccer. A player will react differently to a shot which goes in the third ring, then to a shot which hits the post or the crossbar. Both efforts are a miss, but the player will get more confidence from hitting the post than from hitting the third ring. So, why do we react in this way?
In the case of the soccer example, the near miss most of the times gives confidence. This confidence will afterwards translate into a better performance and will result into more goals. However, when gambling the chances stay the same, a near miss will never increase the chance of winning. The only thing it might do is give you more confidence that you’ll win, such a shame you don’t have it in your own hand.
I found this post super interesting. I had no idea the "near miss" phenomenon was a thing. It makes sense though that consumers feel good about losing by a little as opposed to losing by a lot. Thanks for the thoughts.
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