Fear and Loathing in Las Vegas: Evidence from Blackjack Tables
Bruce I. Carlin
University of California, Los Angeles (UCLA) - Anderson School of Management
David T. Robinson
Fuqua School of Business, Duke University; National Bureau of Economic Research (NBER); Duke Innovation & Entrepreneurship Initiative
NBER Working Paper No. w14955
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.
Number of Pages in PDF File: 34
Date posted: May 19, 2009
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