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Open Access Publications from the University of California

Planned and Actual Betting in Sequential Gambles


Anecdotal evidence suggests that in a gambling environment consumers may end up betting more than they had initially planned. We assess this phenomenon using sequential and fair gambles in a two-stage process (planned and actual bets). The results show that in the planning phase, people behave conservatively, betting on average less after an anticipated loss and the same amount after an anticipated gain. However, after an actual loss in the first gamble is experienced, individuals bet in a subsequent gamble significantly more than what they had initially planned, whereas on average no differences from the plan are perceived after a gain. We show that the reason for such asymmetry is in part due to people's tendency to underestimate, at the planning phase of the gamble, the impact of negative emotions in betting decisions during the actual phase of the gamble.

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