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- Title
Are Longshots Only for Losers? A New Look at the Last Race Effect.
- Authors
McKenzie, Craig R. M.; Sher, Shlomi; Müller‐Trede, Johannes; Lin, Charlette; Liersch, Michael J.; Rawstron, Anthony George
- Abstract
There is evidence that betting on longshots increases in the last race of a day of horse racing. Previous accounts have assumed that the phenomenon is driven by bettors who have lost money and are trying to recoup their losses. To test this assumption of 'reference dependence,' three laboratory experiments simulated a day at the races: In each of several rounds, participants chose either (i) a gamble with a small probability of a large gain and a large probability of a small loss (the 'longshot') or (ii) a gamble with a moderate chance of a small gain or a small loss (the 'favorite'). The first two experiments employed a game played for points, while a third experiment included monetary incentives and stimuli drawn from a real day of racing. These experiments provide a clear demonstration of the last race effect in a laboratory setting. However, the results indicate that the effect is largely reference independent: Participants were more likely to choose the longshot in the last round regardless of whether, and how much, they had won or lost in previous rounds. Winning or losing, bettors prefer to 'go out with a bang' at the end of a series of gambles. Copyright © 2015 John Wiley & Sons, Ltd.
- Subjects
GAMBLING; RISK; HORSE race betting; PROBABILITY theory; DECISION making; ECONOMICS
- Publication
Journal of Behavioral Decision Making, 2016, Vol 29, Issue 1, p25
- ISSN
0894-3257
- Publication type
Article
- DOI
10.1002/bdm.1873