Scientists study why gamblers risk more when losing

Brains are telling them they've made a mistake and need to correct it

March 24, 2002|By Faye Flam | Faye Flam,KNIGHT RIDDER/TRIBUNE

PHILADELPHIA - Why do gamblers often bet more after a losing hand? Or investors throw good money after bad? The answer may lie in the science of the brain.

The same part of your brain gets activated when you make a typo, accidentally drive through a red light or lose a blackjack hand, according to new research. The finding may explain why gamblers tend to take more risks after they've just lost: their brains are telling them they've made a mistake and need to correct it.

William Gehring of Michigan State University said his findings could shed light on all kind of behaviors, including how people play the stock market and how doctors, police or firefighters respond to life-threatening emergencies. The findings were published in a recent issue of Science magazine.

Gehring and his colleagues drew their conclusions by using an EEG to monitor the brain waves of experimental subjects as they played a simple gambling-type game.

"Economists assume that people are rational about their decisions and the economy works in this rational fashion," he said. "We know there are lots of situations where people make decisions based on false expectations."

Real-world laboratory

In the laboratory of the real world - at the casinos of Atlantic City, N.J. - gamblers said it was only natural to make up for losses by betting more. But many said they tried to avoid the impulse.

"When you're down, you want to try to get it back," said Ralph Madonna of Philadelphia, who was relaxing after a day of gambling at the Showboat.

"It takes a little bit of willpower not to do that," said Eleanor Biferi, also of Philadelphia, who rides the bus to Atlantic City with Madonna to play the slot machines and enjoy the waterfront view several days a week.

"We never do that," said Anne Schickling, who came from Philadelphia with her husband, Bob, to play the slot machines and roulette wheel at the Showboat.

"We come with a fixed amount, and that's it," she said.

Before they studied gambling behavior, Gehring's group looked at the way the brain responds to errors. He had test subjects do a simple typing task while hooked up to an EEG, or electroencephalogram, a device for measuring the brain's electrical activity, read through monitors on the scalp. He found that when people made typing errors, the EEG registered excitement in an area of the brain called the anterior cingulate, which is behind the forehead.

`Trouble detector'

"It's an all-purpose trouble detector in the brain," he said, probably alerting people when they've made a wrong turn or left the house with the oven on.

In people with obsessive-compulsive disorder, he said, an overactive anterior cingulate can compel them to go back and check the oven repeatedly, or wash their hands over and over.

Gehrig decided to see if losing a game of pure luck would have a similar effect.

He had 12 subjects, six male, six female, play a video game in which they had to choose between two numbers - 5 and 25. Once they made the choice, the numbers would turn colors - red for a loss and green for a win. If they picked 5 and it won, they'd get 5 cents. If it lost, they'd lose that amount.

Choosing the 25 would result in a gain or loss of 25 cents, so it was always the more expensive option. Ghering found that when people lost either amount, the anterior cingulate would become active within a quarter of a second. And in the next round, the subjects almost always chose the 25, perhaps hoping to make up the loss.

"We've known all along that people gamble more if they've lost money," he said. "Now we've identified what's making that happen - the brain expects you to win."

The finding may explain why people are subject to the so-called gambler's fallacy - thinking that a string of previous losses makes a subsequent win more likely. If you flip a coin five times and the first four come up tails, the chance of the fifth coming up heads is still only 50/50, but people tend to think a head is more likely. (The chance of five tails in a row, though, is just one in 32.)

Understanding probability

The gambler's fallacy comes from a faulty understanding of probability, but it may also be an instinctive reaction, said Gehring. "Advanced students in statistics will make the same probability errors - it's at an unconscious level." The reason that so many of the real Atlantic City gamblers didn't follow the same pattern as Gehring's experimental subjects probably has to do with the amounts of money involved, among other things, said Richard Thaler, an economist at the University of Chicago.

People with a limited amount of money definitely want to make it back, but they'll do something like place their last racetrack bet on a long shot, he said. "That way they risk little and have some chance of breaking even," he said.

Other experiments have shown that people become more averse to loss after they've already lost money, he said.

And he said people tend to gamble more freely with money that's not their own, as in the case of Gehring's subjects. Gehring acknowledged that his subjects were paid enough that they couldn't leave with less money than they came in with. This so-called "house-money effect" could have given the subjects in the experiment a little more urge to take risks than the gamblers in Atlantic City, who had their retirement savings to think about.

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