These biases, whether initial price anchoring or availability heuristics, have an enormous effect on our decision-making processes. To overcome them requires making an active effort to evaluate information critically and consider more factors.
Acknowledging cognitive biases is essential to making sounder gambling decisions and staying grounded in reality. There are various strategies available for doing this – self-awareness, setting limits and using factual information are just some ways of combatting cognitive biases.
Optimism Bias
Optimism bias refers to an individual’s tendency to overestimate his/her chances of success based on past experience, leading them to make decisions which ultimately lead to more losses than wins.
After losing several games, a player may increase their bet size in an attempt to “break through.” Unfortunately, such beliefs neglect the fact that team performance and opponent strength differ between each match-up, meaning past results don’t affect future probabilities.
Online casinos use optimism bias to attract players by prominently showcasing jackpot amounts. These large numbers encourage them to place bets that exceed their risk tolerance even though these bets are unlikely to hit the jackpot. It is therefore crucial that when making betting decisions you prioritize return-to-player percentages instead of jackpot amounts as this will help avoid being affected by cognitive biases such as gambler’s fallacy, overconfidence and the sunk cost fallacy – cognitive biases which often act subconsciously and shape behavior through distorted memories.
Overconfidence Bias
Bettors tend to overestimate their abilities when engaging in betting situations, which is one of the more common psychological biases. Overconfidence may cause bettors to make irrational decisions that work against them and cause major loss.
Bettors often remember their last winning bet and assume they can predict the outcomes of new games with ease, leading them to overestimate their skills and increase the size of their bet, increasing the chances of loss over success.
Overconfidence can cause gamblers to fall prey to the “sunk cost fallacy”, whereby they feel obliged to continue betting just because of what has already been invested. This irrational behavior may result in costly errors which snowball over time.
There are various strategies available to bettors to overcome overconfidence bias. Self-awareness, setting limits and using facts as decision-making criteria all play an integral role. Furthermore, acknowledging that casino and sports betting involve randomness can help alleviate overconfidence bias.
Availability Heuristic
The availability heuristic is a cognitive bias where people tend to make decisions or judgments based on information that comes to their minds more readily, regardless of its relevancy or accuracy; such information could even have no bearing on their judgment at all!
When we experience sudden incidents such as car theft in our community, it may lead to misconceptions and false assumptions about its prevalence. The same thing applies when exposed to vivid information – such as reading about someone passing away from cancer or watching a film depicting someone breaking laws.
Be wary of availability heuristic as it can lead to misjudging risk and probability, particularly under stress conditions when minor misjudgements can become larger ones. One solution would be practicing slow, deliberate decision-making with System 2 thinking in order to eliminate its use as an aid for making decisions. By doing this you will eliminate dependence on availability heuristic.
Anchoring Bias
Anchoring is a cognitive bias in which individuals place too much reliance on the initial piece of information they receive when making decisions and judgments, often irrelevant or arbitrary, even though this initial piece might not be accurate or should influence all subsequent estimates and decisions made after it.
Online casinos utilize anchoring when they display large jackpot amounts prominently on their gaming platforms, which acts as an inducement to place larger bets than they might otherwise.
Tversky and Kahneman’s landmark experiment of having participants watch a roulette wheel spin before asking them to estimate the age of its eventual stopper is an example of anchoring bias. To mitigate it, it is crucial that multiple pieces of data be considered prior to making betting decisions; such measures include reviewing past winning odds as well as seeking input from neutral third parties.