Not Knowing When To Fold 'Em May Not Be Your Fault

According to scientists at the University of Minnesota, gamblers may actually be as rational as the rest of us - and just as wrong.

We've all seen him - the man dressed well but with crazy eyes, sitting at the blackjack table, throwing chip after chip down on the table in front of him, only to have it taken away by the sad-faced dealer standing in for the House.

Or the woman sitting at the nickel slot machine, downing drink after free drinking and pumping the machine full of wrinkled, sweaty 20 dollar bills.

"Oh no." We think. "That could never be us. We're too smart to get trapped like that."

Turns out, we're not.

Researchers at the U of M have been looking into just why it is that seemingly rational human beings - and computer analogues that are programmed to think the same way - consistently make poor choices when it comes to matters of chance and probability.

The longstanding belief in the field has been that gamblers are irrational, and that they somehow differ in their ability to recognize a chance as a bad one, or are unable to understand that the "hot streak" they are on doesn't really exist.

While the team can't claim to have solved the gambling addictions present in large chunks of the population, they have discovered just why it is that we can't see a bad thing coming.

The reason, they say, has to do with probability, and our lack of understanding about it.

Take a coin that has is perfectly balanced as an example. When flipped, the coin has an equal chance of coming down as tails or heads - 50%. We all understand this, but it's once the coin gets flipped again that things start to go wrong. Let's say that ten flips in a row come up heads. The natural human reaction is to seek an order in events, and determine probability based not on what will happen, but what has happened.

Even after 10 flips, the coin has just as much chance as landing heads as it does tails. The outcome is completely independent - no previous toss affects the next one. In our day to day lives, however, we learn that probability is affected by what has come before, and is not a purely independent event. Without conscious thought, our minds assume that the next toss must be tails, simply because the last 10 have been heads. The decision itself is perfectly rational, and is much like telling a lie that your believe is the truth. Your mind doesn't know it to be a lie, and so you tell it as if it were gospel. A lie detector test would bear out that you believed it to be true, but that doesn't make it so.

Heads: We totally called it.Heads: We totally called it. 

In a similar vein, our minds can easily believe that independent events like coin flips or ball spins rely on what has gone before to determine what will happen next. Our decisions about the matter are completely rational, but they remain wrong, nonetheless.

The U of Mers found that once people were informed about the nature of the choice they were making and how it was not affected by previous outcomes, their pattern of responses changed to be more consistent with real-world results.

While this isn't a quick-fix for gambling addiction and will in no way lessen the amount of poker pop-ups that come from your Web browser, it is a start on the road to understanding just why our minds want to screw with us so much.

Source: PhysOrg