Thursday 12 September 2019

Why do people get addicted to gambling?

Gambling is not a good habit and many people get themselves bankrupt because of gambling. Why do some people get so addicted to gambling? To answer this question, I would like to exclude one factor from this issue, the joy gained from gambling, the activity itself. I think in the key to this problem is prospect theory. People tend to overestimate small probabilities, this means people can overestimate their chances of winning in gambling. This could increase people’s incentives to participate in gambling.But this is not the whole story, since this only explains why people start their first gambling but does not explain the addiction to gambling.
When people suffer a loss, why do some of them still keep gambling? People are generally loss aversive, so if there is a way to overturn their losses, they will consider it. Of course, there is a way to overturn their losses, which is to keep gambling. So people will consider this choice. They  may still overestimate the probability of winning. More importantly, some people do not see each bet they place as an independent event, but rather see the entire gambling as one event. In this case, they believe although the chance of winning one bet is low, the chance of losing the entire gamble is low if they place a significantly large number of bets. Because of such belief, they increase their money put into gambling after each round, then at most time, their losing rate is increasing over time.
Overall, there are two main reasons for some people getting addicted to gambling, one is these people tend to overestimate their winning probability, the other is they fail to see each bet they place as an independent bet from other bets they place.

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