- Heuristics - Simple rules of thumb
- Common types of heuristic
- The Hot Hand fallacy
A lot of gamblers trust their gut instinct to bet without realizing that relying on ready made rules of thumb – known in psychology as heuristics – can lead to poor decision making. Read on to find what the most common heuristics are and how to avoid them.
There is a very good reason we rely on heuristics – evolution. Our distant ancestors when faced with complex life-threatening problems didn’t have time to weigh up the situation, so developed quick-fire methods. Those that worked were passed down through generations, and we are still relying on them, often when we shouldn’t.
Introducing the common Heuristics
Anchoring
Anchoring influences our ability to accurately gauge the likelihood of specific outcomes or to estimate values in a sequence.
Example: Participants are asked to estimate the proportion of African countries in the United Nations. They first see a randomly generated number (the anchor) and are queried if the actual percentage is higher or lower than this anchor. Their final guess tends to gravitate towards the anchor, despite its randomness.
This tendency to cling to an arbitrary reference point, even in gambling scenarios on platforms like 7x7Bets, illustrates the anchoring effect. Bettors should be mindful of anchors in betting language, recognizing how handicaps and spread values subtly shape our decisions.
Availability bias
Availability bias manifests in people’s tendency to attach greater significance to events that leave the strongest impression, or are easier to recall.
"From a betting perspective be wary of assigning excessive significance to more recent or memorable results'' Examples of this include the way people overestimate the risk associated with dramatic and traumatic events such as a terrorist attack or earthquakes. The sale of earthquake insurance goes up immediately after earthquakes though the risk is greatly diminished, while people are prepared to pay a higher premium to insure against death from an act of terrorism than insurance against death of any kind (which would obviously include terrorism).
From a betting perspective be wary of assigning excessive significance to more recent or memorable results. Ask yourself whether you find it easier to recall a 0-0 draw or a high-scoring game.
It’s likely to be the latter, but it doesn’t mean it is more probable. In soccer bettors tend to overestimate the frequency of events like red-cards and corners, because they are important and easily recalled. This impacts perceived probability and betting behavior.
It is linked to a common phenomenon of bettors favoring the Over in Totals markets, as availability bias leads them to wrongly conclude the event concerned is more likely than in reality.
Diversification
People show a preference for more varied selections when choices are presented simultaneously rather than sequentially.
Example: Given the task to pick chocolates from an assortment, people choose a wider variety when selecting all at once compared to one at a time.
In betting, this leads to a tendency to spread bets across different outcomes, perceiving it as a more diversified approach. However, unless the Expected Value suggests otherwise, this diversification doesn’t inherently increase your chances of winning.
Escalation of commitment or sunk cost
This heuristic describes how people feel compelled to justify a commitment by increasing the cumulative investment despite the potential cost going forward outweighing the potential benefit.
"People tend to believe short sequences of random events are representative of longer ones" This is commonly described as ‘throwing good money after bad’. An example would be to sit through a film that you are not enjoying just because you have already invested time and money in watching it, and therefore determined to justify that investment.
From a betting perspective this can be seen when punters persist with a bet that has a high probability of incurring a large cost rather than taking a certain immediate, but smaller loss. People in these situations tend to display an irrational determination to justify their original decision, instead of ‘cutting their losses’.
Representativeness, or the Gambler's Fallacy
The misconception that short sequences of events can predict longer trends leads to faulty decision-making in gambling.
Example: The gambler’s fallacy is also known as the Monte Carlo Fallacy because in 1913 black came up 26 times in a row on a roulette table at the Monte Carlo casino. After the fifteenth black bettors were piling onto red, assuming the chances of yet another black number were becoming astronomical, thereby illustrating an irrational belief that one spin somehow influences the next.
This fallacy is akin to believing in winning or losing streaks, which doesn’t hold true for games of chance. Whether it’s roulette or dice games on 7x7Bets, each outcome is independent and unaffected by preceding results.
It has come to be known as the Hot Hand Fallacy after a study in the 1980s suggested a basketball player who successfully makes a shot is no more likely to be successful the next time they throw just because of their initial success.
This is particularly relevant in betting for random games of chance such as roulette, lotteries and dice games.
Humans are not infallible; our instincts frequently lead us astray, particularly in gambling. It’s crucial to critically assess our intuitions, especially in the context of betting on online platforms like 7x7Bets.
If this article has struck a chord with you, then further reading of Daniel Kahneman & (the late) Amos Tversky is highly recommended. The pair are widely credited with ground-breaking work in the field of cognitive biases and Kanheman went on to win the 2002 Nobel Memorial Prize in Economics, despite not being an economist.
His best seller “Thinking Fast, Thinking Slow" summarizes much of his work, and will open the eyes of anyone interested in how people deal with making risk based decisions under uncertainty, which is exactly what betting is.
Now you know what is the Heuristics in betting. Sign Up Now or click HERE to play at 7x7Bets, the most reliable and trustworthy online casino in India. Don't forget to claim your withdrawable real money welcome deposit bonus, weekly cashback bonus and referral bonus!
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