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'Gambler's Fallacy' Is All in Your Mind

Brain urges you to keep betting long after you've lost, study finds

THURSDAY, March 21, 2002 (HealthDayNews) -- The next time you lose a bucket of quarters playing the slot machines, don't fault the one-armed bandits. Blame your brain.

A new study from the University of Michigan says your brain actually goads you to keep trying to win even after you've suffered a string of losses. It's a finding that may lead to ways to help gambling addicts or people who take dangerous risks in the stock market.

"People have known all along that people gamble more after they've lost. They call it gambler's fallacy. You lose, and you keep on gambling," says study author William J. Gehring, an assistant professor of psychology at the University of Michigan. "The basic thing we found is that it's because your brain thinks essentially you're due for a win, that you're somehow developing an expectation that after having lost money, you're going to win money."

The study, which appears in tomorrow's issue of Science, involved six men and six women, aged 19 to 30, who were told to do a simple gambling task while electrical activity in their brain was recorded.

The specific area monitored was the anterior cingulate cortex (ACC) of the medial frontal cortex. There are a number of theories about the role of the ACC: It's involved in detecting errors; it catches conflicting response tendencies, or it detects important negative events.

In the gambling simulation, the people in the study were shown two numbers, either a five or a 25, on a computer screen. They had to choose one of those numbers. A second after they made their choice, the number turned either green or red to indicate whether they had won or lost.

This wasn't purely hypothetical. The people in the study actually won or lost money based on their choices. For example, if they picked 25 and it was the wrong number, they lost 25 cents from potential bonus money they were paid on top of the standard fee they received to take part in the experiment.

"In fact, we had a little pile of cash that, when they won, we'd put money on there. And when they lost, we'd take it away. The idea is to make it very tangible and a visceral experience for the subject," Gehring says.

"People study rewards in animals using things like fruit juice," he adds. "So for humans, the equivalent of fruit juice, for many people anyway, is probably money."

During the betting, the brain activity monitors showed stronger neural processing signals in the ACC after the bettors lost, compared to when they won. That pattern held true even when they suffered a small loss and were told their other choice would have resulted in an even greater financial loss.

The bettors also made more risky choices after they suffered a losing streak, a behavior that did not occur on a winning streak.

These are not decisions based on careful reasoning, Gehring explains.

"The brain response that we're looking at is a very fast response. So, we found that within about a quarter of a second after finding out that they had experienced a loss, their brain registered that loss. So it's too fast to be involved in a lot of conscious deliberation," Gehring says.

"The fact that they're able to register these losses so quickly is interesting, because it suggests that you're sort of monitoring whether you're winning or losing at this almost unconscious or very automatic level. It doesn't take a lot of effort to detect these losses," he adds.

There's a lot of evidence the same responses occur in other animals, and could be a survival mechanism, Gehring says. The brain is wired so that, even if you suffer setbacks, you're compelled to try repeatedly until you succeed.

Understanding this particular brain process may lead to ways to help people with gambling addictions or people who make risky stock market decisions.

"Our idea is that this is tied to a very basic reward system. (This research) could help us understand some of the processes that cause people to keep on going when they are losing money. Not only standing in front of a slot machine, but also why people might hold on to a losing stock for too long," Gehring says.

Gambling is a serious addiction. It's estimated that about 3 percent of Americans will experience a gambling problem, resulting in significant debt, family disruption, job loss or suicide, says the Illinois Institute for Addiction Recovery.

What to Do: To learn more about gambling addiction and how to get help, go to Gamblers Anonymous, the Illinois Institute for Addiction Recovery, or National Counseling Intervention Services Inc.

SOURCES: William J. Gehring, Ph.D., assistant professor, department of psychology, University of Michigan, Ann Arbor; March 22, 2002, Science
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