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Gamblers Learn from Experience

Author

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  • Matthew Olckers

    (SoDa Laboratories, Monash University)

  • Joshua E. Blumenstock

    (SoDa Laboratories, Monash University)

Abstract

Mobile phone-based gambling has grown wildly popular in Africa. Commentators worry that low ability gamblers will not learn from experience, and may rely on debt to gamble. Using data on financial transactions for over 50 000 Kenyan smartphone users, we find that gamblers do learn from experience. Gamblers are less likely to bet following poor results and more likely to bet following good results. The reaction to positive and negative feedback is of equal magnitude, and is consistent with a model of Bayesian updating. Using an instrumental variables strategy, we find no evidence that increased gambling leads to increased debt.

Suggested Citation

  • Matthew Olckers & Joshua E. Blumenstock, 2020. "Gamblers Learn from Experience," SoDa Laboratories Working Paper Series 2020-07, Monash University, SoDa Laboratories.
    • Handle: RePEc:ajr:sodwps:2020-07
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    References listed on IDEAS

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    Cited by:

    1. Martin Chegere & Paolo Falco & Marco Nieddiu & Lorenzo Pandolfi & Mattea Stein, 2022. "It’s a Sure Win! Experimental evidence on overconfidence in betting behavior," CSEF Working Papers 655, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.

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    More about this item

    Keywords

    gambling; sports betting; mobile money; Bayesian updating;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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