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Fear and Loathing in Las Vegas: Evidence from Blackjack Tables

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Author Info
Bruce Ian Carlin
David T. Robinson

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Abstract

Psychologists study regret primarily by measuring subjects' attitudes in laboratory experiments. This does not shed light on how expected regret affects economic actions in market settings. To address this, we use proprietary data from a blackjack table in Las Vegas to analyze how expected regret affects peoples''decisions during gambles. Even among a group of people who choose to participate in a risk-taking activity, we find strong evidence of an economically significant omission bias: players incur substantial losses by playing too conservatively. This behavior is prevalent even among large stakes gamblers, and becomes more severe following previous aggressive play, suggesting a rebound effect after aggressive play.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 14955.

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Date of creation: May 2009
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Handle: RePEc:nbr:nberwo:14955

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D03 - Microeconomics - - General - - - Behavioral Economics; Underlying Principles

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  6. John Y. Campbell, 2006. "Household Finance," NBER Working Papers 12149, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  8. Berk, Jonathan B & Hughson, Eric & Vandezande, Kirk, 1996. "The Price Is Right, but Are the Bids? An Investigation of Rational Decision Theory," American Economic Review, American Economic Association, vol. 86(4), pages 954-70, September. [Downloadable!] (restricted)
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  10. Colin Camerer & Teck-Hua Ho, 1999. "Experience-weighted Attraction Learning in Normal Form Games," Econometrica, Econometric Society, vol. 67(4), pages 827-874, July.
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  13. Ritov, Ilana & Baron, Jonathan, 1992. " Status-Quo and Omission Biases," Journal of Risk and Uncertainty, Springer, vol. 5(1), pages 49-61, February.
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  15. Laurent E. Calvet & John Y. Campbell & Paolo Sodini, 2009. "Fight Or Flight? Portfolio Rebalancing by Individual Investors-super-," The Quarterly Journal of Economics, MIT Press, vol. 124(1), pages 301-348, February. [Downloadable!] (restricted)
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