🃏 The Gambler's Conceit: When Psychology Meets Gambling

Ever wondered why gambling is so addictive? Why people compare stock trading to gambling? What is the difference between the two? We help you compare by understanding the psychology behind gambling.

They say that Gita and Mahabharata can give answers to all your life's questions. But there is one question posed by the tale itself, that perplexes us all. 

Why did Yudhishthir keep on betting in the game of dice? He lost his kingdom, but didn't stop. He lost his brothers, but didn't stop. He even lost himself and his wife! Why did he still not stop? 

Turns out, Shakuni Mama wasn't just a master of deceit, but also a master of psychology. He knew what gambling would do to Yudhishthir's mind. 

Whether it is a game of Blackjack or trading in the stock markets, if you don’t do the math, a gamble is a gamble. 

It can change lives. For better or for worse. Though usually, it’s the latter. So, why does this happen? 

ReadOn! 

---

🎲 The Gambler Conceit

Gambling and addiction go hand in hand. And like with all cliched addicts, the go to phrase here is “I can stop whenever I want”. Except, we almost never can. 

The inability of a gambler to stop, think, rationalise, and logically follow when to bet and when to get out is related to a concept called "The Gambler’s Conceit." 

Now, two situations can arise here. The first is when people are running in losses, the second when they’re booking profits. No matter how far along or far behind you are in the game, you will be ruined. How? 

If you are incurring losses, gambler’s conceit plays out through another psychological delusion, the sunk cost fallacy. 

After all, if you have lost money, won’t you be tempted to do something to recover it? Perhaps continue betting. But, in an attempt to recover the ‘sunk cost’, you keep on putting in more and more money. Ultimately, losing it all. Our beloved Yudhishthir also fell into this exact trap.

Now Gambler’s Conceit and Sunk Cost Fallacy don’t come alone. They bring one more friend along: Gambler’s Fallacy. 

You know how we have this notion that every night has a morning, or a set of bad episodes has to be followed by good ones? While this optimism keeps us going, it becomes our undoing while gambling. 

---

🕵️ Gambler's Fallacy

Gambler’s Fallacy tricks us into thinking that a losing streak in a game of chance has to come to an end. It tricks us into thinking that there is a pattern. But in reality there is none. Every event is independent. But our romanticism doesn’t stop until we lose our entire life’s savings.

Now let’s consider a situation where you are winning. In this case you have no incentive to stop! 

Once in the throes of a winning streak, we are easily convinced that it is their skill, or good luck is on their side. Once taken over by greed, we don’t know where to stop. But sooner or later, the luck runs out. And in the process of recovery, we too end up losing it all.  

What’s all the more interesting is that gambler’s conceit isn’t a fallacy for gamblers alone. It plays out in the markets too. Isn't the dilemma that we face while buying or selling a stock an example of Gambler's conceit? 

If I hold on to this stock a bit longer, maybe then I will be able to recover the lost amount. 

People chase money all the time. But sometimes, money isn’t it. Sometimes, we fall prey to something far bigger than these fallacies. Something that is responsible for humanity's biggest achievements as well as their steepest downfalls: Dopamine. 

---

🧠 The Dopamine Effect

This tiny molecule in our brain makes us chase thrills and adventure. It's not the win that drives us. Instead it's the anticipation of the win that makes us a compulsive gambler.  

And understanding this has become even more important in today's times with the rise of real-money games. These games give us massive dopamine hits to get us hooked, which could lead to massive losses and a gambling addiction. 

Identifying these behaviours and psychological fallacies and rectifying them can save us a lot of money and anxiety. 

The key to any bet or trade should be calculative. Emotions should not overpower our judgement and reason.

So, Keep Calm, Play Smart, and ReadOn!

---

Let us know if you liked today's piece. If you did, please share this with your friends, and get them to subscribe :)

See you tomorrow, smarty! 🤓

If you are coming here for the very first time: Join us on WhatsApp and never miss an update! 👇

---