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Planned versus Actual Betting in Sequential Gambles

Journal of Marketing Research, Vol. 46, pp. 372-383, June 2009

46 Pages Posted: 17 Apr 2007 Last revised: 15 Jun 2009

Eduardo B. Andrade

University of California, Berkeley - Haas School of Business

Ganesh Iyer

University of California, Berkeley - Marketing Group

Date Written: 2009

Abstract

Anecdotal evidence suggests that in a gambling environment consumers may end up betting more than they had initially planned. The authors assess this phenomenon in a series of three experiments, where people are exposed to sequential and fair gambles in a two-stage process (planned and actual bets). The results show that in the planning phase, people behave conservatively, betting on average less after an anticipated loss and the same amount after an anticipated gain. However, after experiencing an actual loss in the first gamble, individuals in a subsequent gamble bet significantly more than what they had initially planned, whereas on average no differences from the plan are perceived after an actual gain. The reason for such asymmetry is in part due to people's tendency to underestimate, at the planning phase of the gamble, the impact of negative emotions in betting decisions during the actual phase of the gamble.

Keywords: emotions, feelings, empathy gap, gambling, risk taking, reference point

JEL Classification: M31

Suggested Citation

Andrade, Eduardo B. and Iyer, Ganesh, Planned versus Actual Betting in Sequential Gambles (2009). Journal of Marketing Research, Vol. 46, pp. 372-383, June 2009. Available at SSRN: https://ssrn.com/abstract=981059

Eduardo B. Andrade (Contact Author)

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

Ganesh Iyer

University of California, Berkeley - Marketing Group ( email )

Haas School of Business
Berkeley, CA 94720
United States

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