Why do we gamble, when we know that …

What motivates us to gamble? While the law of large numbers tells us that we will eventually lose. Even if we play it safe, we know that the probability of winning is less than the probability of losing. What do we do in everyday life when we are presented with something that is clearly worth less or provides no benefit? Then we point to our brow. We haven’t gone insane, after all. /p> /p> p> Nonetheless, we continue to pour money into (online) video slots. And we continue to buy lottery tickets despite the fact that our chances of winning are slim. This demonstrates that we do not make rational decisions, but rather that other phenomena are at work.

What motivates us to gamble? h2> /h2> p> There has already been a lot said about it. This demonstrates how difficult the path to the answer is. One researcher looks for it in dopamine production, while another looks for it in pleasure, chance, or another reason. Of course, a combination of those options is possible. /p> /p> p> In this article, we will investigate the claim that we gamble because we have insufficient knowledge of our true probabilities and utility.

Chances of winning h2> /h2> p> We can calculate the odds of winning for a variety of bets. Others will have a more difficult time because the data is variable or calculated as a percentage. Consider the rake in poker, the percentage for the casino, or the intermediary’s margin (your magazine store has all kinds of scratch cards in its store for a reason). /p> /p> p> We do know, however, that the probability of winning is negative for all types of betting. In other words, the likelihood of loss outweighs the likelihood of profit. Huygens, a Dutchman, stood at the birthplace of probability calculation. In mathematics, this is known as expectation (value). We discussed it at the beginning of probability.

And we can thank Jacob Bernoulli for the law of large numbers. It states that if you play long enough, you will always have the opportunity to win. A dice with six faces has a 1/6 chance of winning, while a coin has a 50-50 chance of winning.

Why should you gamble? And how much is it?

The theory of utility was developed by Jacob’s cousin Daniel Bernoulli, who was born in Groningen. That, of course, did not happen by chance. Many scholars before him had already addressed gambling issues. This is where the expectation value (probability of winning) first emerged.

Why do people bet if they know the odds are stacked against them? And how much do you bet if you know how likely you are to win something? These were the follow-up questions that Bernoulli, as well as Pascal, Fermat, and others, were already pondering. But there was one more thing. Why not bet if your chances of winning are very good?/p>

Risk and utility h2> /h2> p> All questions, according to Daniel Bernoulli, can be answered with the expectation of benefit and risk. These, he claimed, were linked to morality, or desirable behavior at a given time in society. /p> /p> p> According to Bernoulli, utility is a personal choice that is influenced by a person’s circumstances. When it comes to gambling, a millionaire will make a different decision than someone with (much) less financial means. /p> /p> p> Risk is a useful concept. How far is someone willing to go to take or avoid a risk? A wealthy person will also go further than a poor person.

Not logical

Based on the foregoing, we can conclude that a gambler acts irrationally. Some might call it ‘thoughtless.’ Profitability is low, especially over the long term. Nonetheless, we continue to gamble, or rather, to hope for a win. So something motivates us to act against our better judgment.

Our true profit expectations are obscured by our perception of potential profit. We don’t consider the odds of winning, the utility, or the risk. It’s not for nothing that the state lottery and Eurojackpot show movies of all the things we can buy… if we win. While the odds of winning are not as low as in those lotteries.