Editing Gambling (section)

==Psychological biases==
Gamblers may exhibit a number of [[Cognitive bias|cognitive]] and [[Motivated reasoning|motivational]] biases that distort the perceived odds of events and that influence their preferences for gambles.
* ''Preference for likely outcomes''. When gambles are selected through a choice process – when people indicate which gamble they prefer from a set of gambles (e.g., win/lose, over/under) – people tend to prefer to bet on the outcome that is more likely to occur. Bettors tend to prefer to bet on favorites in athletic competitions, and sometimes will accept even bets on favorites when offered more favorable bets on the less likely outcome (e.g., an underdog team).<ref>{{Cite journal|last1=Simmons|first1=Joseph P.|last2=Nelson|first2=Leif D.|title=Intuitive confidence: Choosing between intuitive and nonintuitive alternatives.|journal=Journal of Experimental Psychology: General|volume=135|issue=3|pages=409–428|doi=10.1037/0096-3445.135.3.409|pmid=16846272|year=2006|citeseerx=10.1.1.138.4507}}</ref>    
* ''[[Optimism bias|Optimism]]/Desirability Bias'''.''''' Gamblers also exhibit optimism, overestimating the likelihood that desired events will occur. Fans of NFL underdog teams, for example, will prefer to bet on their teams at even odds than to bet on the favorite, whether the bet is $5 or $50.<ref>{{Cite journal|last1=Simmons|first1=Joseph P.|last2=Massey|first2=Cade|title=Is optimism real?|journal=Journal of Experimental Psychology: General|volume=141|issue=4|pages=630–634|doi=10.1037/a0027405|pmid=22329753|year=2012}}</ref>
* ''Reluctance to bet against (hedge) desired outcomes.''<ref name=":0">{{Cite journal|last1=Morewedge|first1=Carey K.|last2=Tang|first2=Simone|last3=Larrick|first3=Richard P.|date=2016-10-12|title=Betting Your Favorite to Win: Costly Reluctance to Hedge Desired Outcomes|journal=Management Science|volume=64|issue=3|pages=997–1014|doi=10.1287/mnsc.2016.2656|issn=0025-1909}}</ref> People are reluctant to bet against desired outcomes that are relevant to their identity. Gamblers exhibit reluctance to bet against the success of their preferred U.S. presidential candidates and Major League Baseball, National Football League, National Collegiate Athletic Association (NCAA) basketball, and NCAA hockey teams. More than 45% of NCAA fans in Studies 5 and 6, for instance, turned down a "free" real $5 bet against their team. From a psychological perspective, such a "[[Hedge (finance)|hedge]]" creates an interdependence dilemma – a motivational conflict between a short-term monetary gain and the long-term benefits accrued from feelings of [[Social identity theory|identification]] with and loyalty to a position, person, or group whom the bettor desires to succeed.  In economic terms, this conflicted decision can be modeled as a trade-off between the outcome utility gained by hedging (e.g., money) and the [[Signalling (economics)|diagnostic costs]] it incurs (e.g., disloyalty). People make [[Self-perception theory|inferences]] about their beliefs and identity from their behavior. If a person is uncertain about an aspect of their identity, such as the extent to which they value a candidate or team, hedging may signal to them that they are not as committed to that candidate or team as they originally believed. If the diagnostic cost of this self-signal and the resulting identity change are substantial, it may outweigh the outcome utility of hedging, and they may reject even very generous hedges.<ref name=":0" />
* ''Ratio bias.'' Gamblers will prefer gambles with worse odds that are drawn from a large sample (e.g., drawing one red ball from an urn containing 89 red balls and 11 blue balls) to better odds that are drawn from a small sample (drawing one red ball from an urn containing 9 red balls and one blue ball).<ref>{{Cite journal|last1=Pacini|first1=Rosemary|last2=Epstein|first2=Seymour|title=The relation of rational and experiential information processing styles to personality, basic beliefs, and the ratio-bias phenomenon.|journal=Journal of Personality and Social Psychology|volume=76|issue=6|pages=972–987|doi=10.1037/0022-3514.76.6.972|pmid=10402681|date=June 1999}}</ref>
* ''[[Gambler's fallacy]]/positive recency bias.''