Gambler’s Fallacy – Why People Are More Confident AFTER Placing Bets Than Before
Why is it that before we place a bet we may not be sure about it? But as soon as we’ve done it and pulled the trigger on the bet we are all suddenly Voulgaris and the greatest sports bettors of all time. This is something I see all the time and something that I try to prevent myself from falling into.
Essentially the Gambler’s Fallacy states that “It’s never our fault.” The definition officially from wiki is below…. Terrible definition.Investopia’s definition is a bit better.
The general feeling is that when something happens a lot (say a team wins for example) they are more likely to lose the next game because or “variance” or some other made up factor.
Variance is luck in sports betting and should not be related back to the gambler’s fallacy in any way. In this post though I’m not going to talk about the gambler’s fallacy in relation to this but another sports betting fallacy or just straight up mind-f*cking that some people seem to go through.
It is of course the increased confidence once you’ve placed a bet.
It relates back to trying not to be wrong. For example; If I invest in a particular stock or place a bet on a particular team. Say I wasn’t too sure before doing it but I decided to go for it anyway regardless. Once the money is on it’s very difficult to get it back, and even if I did, I’d suffer a loss BOTH financially and emotionally.
This essentially means that once I place a bet I am committed to this bet. Whether that bet is an investment, sports bet, roulette spin and even a relationship or business! (Yes this works in relationships too.)
I’m writing this to warn you of the potential side effects of this. Something that I see a lot. I bet on something, therefore I must be right, therefore I will tell people I’m right and so on the chain goes on and on even if the initial “lean” was a poor one.
And the worst thing is if it goes on to be right, because then this circle repeats and repeats and repeats into the cycle of death. Or Extreme DEBT, which is what happens most of the time and hence why all gamblers are called addicts.
The history of the theory
I first heard this principle in a book, not sure what book it was but I read a f*ck ton so it could have been anything. Essentially the research was done on a number of punters at a horse racing track. These were asked the confidence of their picks before and after they had placed their bets. That’s about a 10 minutes difference. No additional information, nothing changed accepted they had put money on the one they thought.
As you can probably guess was these individual were substantially more confident in their plays once they had put some money down than before they had. This is dangerous as we mentioned above as “chasing” can occur very very easily.
How To Solve This
But we can change this but doing the reverse. It’s a very simple technique that we can use. Instead of actually placing the bet I want you to try to convince yourself to put 10 units on this bet. If you can’t then you probably shouldn’t even put 1 unit on. So we are saying before we’ve even placed a bet would we bet 10 times more and recommend it as one the best bets on the week to family and friends? If it’s a no then don’t bother placing it. Or maybe reduce to a half unit at most! This will prevent the new gambler’s fallacy and also save you a lot of money in the long run too.