Everyone’s a winner? The role of cognitive biases in lottery playing

Earlier this week, I was interviewed by the Metro newspaper about the psychology of playing the National Lottery.  One reader of the article had a somewhat sarcastic dig at me:

“I happened to glance through the Metro today, whilst waiting for an appointment, and noticed a feature on lotteries. It actually draws on Prof Mark Griffiths from Nottingham Trent University, to deliver this shocking statement ‘Prof Griffiths believes lotteries are a form of gambling’”

Out of context, the statement does sound somewhat banal. However, the point that I was making to the journalist was that many lottery players don’t believe that buying a lottery ticket is really gambling. Studies have shown that if you ask “pure lottery players” (i.e., those people who only play the lottery and don’t engage in any other form of gambling) if they gamble, a large proportion typically answer that they don’t. Lottery players often refer to their behaviour as nothing more than a ‘harmless flutter’. Given that very few people develop problems from weekly or bi-weekly lotteries is a fair and accurate comment. Other lottery players will claim that the activity is not really a form of gambling because the money goes to good causes (which while partly true) doesn’t negate the fact that playing the lottery is a form of gambling.

Over the years I have written many papers and articles on lottery play. In today’s blog I briefly examine some of the cognitive biases and heuristics that have been applied to lottery gambling (excluding the psychology of the near miss that I examined in a previous blog). Heuristics are usually defined as ‘rules-of-thumb’ (i.e. simple ‘if-then’ rules or norms). There are many heuristics (e.g., the illusion of control, the availability bias, the sunk cost bias, the representativeness bias, etc.) that may help explain why lotteries are so appealing to the general public – beyond the basic reason that playing the lottery provides the chance to win a life-changing amount of money (millions of pounds) for a low cost (typically £1). Although the following heuristics are not an exhaustive list, they do contain those cognitive biases and heuristics that are probably most salient to the psychology of lottery gambling:

Illusion of control: Ellen Langer, a very well know American psychologist at Harvard University, defined the illusion of control is an expectancy of success higher than the objective probability would warrant. In essence, her basic assumption was that in some chance settings (e.g., buying a lottery ticket), those conditions that involved factors of choice, involvement, familiarity and/or competition stimulate the illusion of control to produce skill orientations. These observations have been confirmed in both laboratory and natural setting based experiments. For instance, Langer’s seminal 1970s experiments showed that participants would sell previously bought lottery tickets for a higher price if they had picked it themselves as opposed to having it ‘assigned’ by someone else.

Flexible attributions: Flexible attributions are cognitive distortions in which gamblers attribute their successes as due to their own skill and failures as due to some external influence. Research by US psychologixt Thomas Gilovich (Cornell University) demonstrated that gamblers transform their losses into ‘near wins’ and spend far more time discussing their losses and discounting them while bolstering their wins. Professor Gilovich also showed that gamblers display hindsight bias (i.e. they are not surprised by the outcome of a gamble and report they predicted it after the event has happened).

Representativeness bias: The classic work on representativeness bias – by Israeli-US psychologists Daniel Kahneman and Amos Tversky – applies to random samples of data and is where people expect to find a representative relationship between samples drawn from the population and the population itself. For instance, when subjects are asked to create a random sequence of imaginary coin tosses they tend to produce sequences where the proportion of ‘tails’ in a short segment is closer to 0.5 than chance would predict. This particular mechanism may well explain the ‘gambler’s fallacy’, (i.e., the expectation that the probability of winning will increase with the length of an ongoing run of losses).

Availability bias: The availability bias occurs when a person evaluating the probability of a chance event makes the judgment in terms of the ease with which relevant instances come to mind. With regards to the lotteries, winners are often highly publicised. These both give the idea that wins are regular and commonplace when in fact they are rare. A vividly presented case study or example can make a lasting impression.

Sunk cost bias: Another factor that may be important in why lotteries have been so financially successful is the sunk cost bias (also known as entrapment). Entrapment refers to a commitment to a goal that has not yet been reached. The basic premise is to get the person committed to the cause or product as soon as possible. Once a commitment is made, the nature of thought changes. To the converted (in this case the lottery ticket buyer), careful and considered analysis of the situation is likely to be minimal. Lotteries have one great advantage over many other forms of gambling in that many people pick exactly the same numbers each week. In the UK, a newspaper survey reported that 67% of people choose the same numbers each week. Of this figure, the survey reported that 30% chose their regular numbers after an initial random selection and 37% chose the same numbers each week based on birthday dates, house numbers, favourite numbers, etc. However, no details were given about demography of the participants or the sample size.

By picking the same numbers the person may become ‘entrapped’. Each week the player thinks they are coming closer to winning. The winning day is impossible to predict but should the lottery player decide to stop and cut their losses, they are faced with the prospect that the very next week their numbers might come up. The player is thus entrapped and the entrapment become greater as the weeks go by. According to Australian psychologist Dr Michael Walker, people can reach a point where holidays cannot be taken unless arrangements are made for the weekly ticket to be completed and entered. The ‘entrapment’ process is not only known as the ‘sunk cost bias’ but is also another ‘foot-in-the-door’ technique.

These heuristics and biases give some insight into why gamblers do not learn from their past losses and help to explain supposedly ‘irrational’ behaviour. However, heuristics and biases have no predictive value. It is almost impossible to know which heuristic will be applied in a given situation and it is quite possible for the same person to use a different heuristic in the same situation on different occasions.

Dr Mark Griffiths, Professor of Gambling Studies, International Gaming Research Unit, Nottingham Trent University, Nottingham, UK

Further reading

Arkes, H.R. & Blumer, C. (1985). The psychology of sunk cost.  Organizational Behavior and Human Decision Processes, 35, 124-140.

Griffiths, M.D. (1997). The National Lottery and instant scratchcards: A psychological perspective. The Psychologist: The Bulletin of the British Psychological Society, 10, 26-29.

Griffiths, M.D. (1997). Selling hope: The psychology of the National Lottery. Psychology Review, 4, 26-30.

Griffiths, M.D. (2008). Problem gambling and European lotteries. In M. Viren (Ed.), Gaming in New Market Environment. pp. 126-159. New York: Macmillan Palgrave.

Griffiths, M.D. & Wood, R.T.A. (2001). The psychology of lottery gambling. International Gambling Studies, 1, 27-44.

Kahneman, D. & Tversky, A. (1973). Availability: A heuristic for judging frequency and probability. Cognitive Psychology, 5, 207-233.

Langer, E.J. (1975). The illusion of control. Journal of Personality and Social Psychology, 32, 311-328.

Langer, E.J. & Roth, J. (1975). The effect of sequence outcome in a chance task on the illusion of control. Journal of Personality and Social Psychology, 32, 951-955.

Tversky, A. & Kahneman, D. (1971). Belief in the law of small numbers. Psychological Bulletin, 76, 105-110.

Walker, M.B. (1992). The Psychology of Gambling. Pergamon, Oxford.

Wagenaar, W. (1988). Paradoxes of Gambling Behaviour. Erlbaum, London.

Wood, R.T.A. & Griffiths, M.D. (2004). Adolescent lottery and scratchcard players: Do their attitudes influence their gambling behaviour? Journal of Adolescence, 27, 467-475.