Working Paper: NBER ID: w14955
Authors: Bruce Ian Carlin; David T. Robinson
Abstract: Psychologists study regret primarily by measuring subjects' attitudes in laboratory experiments. This does not shed light on how expected regret affects economic actions in market settings. To address this, we use proprietary data from a blackjack table in Las Vegas to analyze how expected regret affects peoples''decisions during gambles. Even among a group of people who choose to participate in a risk-taking activity, we find strong evidence of an economically significant omission bias: players incur substantial losses by playing too conservatively. This behavior is prevalent even among large stakes gamblers, and becomes more severe following previous aggressive play, suggesting a rebound effect after aggressive play.
Keywords: No keywords provided
JEL Codes: D03
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| expected regret (D81) | decision-making (D70) |
| aggressive play (C72) | passive mistakes (D91) |
| past aggressive play (C73) | current decision-making (D70) |
| omission bias (D91) | expected regret (D81) |
| decision-making (D70) | losses (G33) |
| deviation from basic strategy (C73) | win rate (C71) |