Stubborn by Design: Neurobiological Foundation of Maladaptive Risk-Taking at Downturn Onsets

Abstract

We document a spillover of past rewards into subsequent gambling decisions in a controlled laboratory experiment: after receiving rewards from a profitable gambling strategy, participants persist with it despite being explicitly informed it has become unprofitable. Through experimental manipulations and computational modelling, we isolate a Pavlovian mechanism driving this maladaptive behavior: past rewards create an automatic attraction to gambling that can derail rational choice. This Pavlovian influence intensifies under uncertainty, suggesting it extends beyond gambling for monetary rewards to include "sign-tracking"-an attraction to gambling cues independent of monetary outcomes. These findings may help explain behavioral persistence in financial markets and suggest dual-focused interventions for problem gambling: both recalibrating outcome expectations and redirecting attention away from gambling cues.

Keywords: Risk-taking, Pavlovian influences, Investor inertia, Problem gambling