In math class, expected value is often used when deciding whether or not a game is worth playing. A common refrain is that games with negative expected value should be avoided. However, nearly all games of chance have a negative expected value, and a simple expected value analysis fails to explain why these games are so popular. In this article, we consider three psychological factors leading to irrational gambling behavior – the illusion of control, hypersensitivity to reward, and beginner’s luck – and explore how these factors affect an otherwise purely rational model of gambling behavior.
"Worth the Risk? Modeling Irrational Gambling Behavior,"
The Mathematics Enthusiast: Vol. 12
, Article 7.
Available at: http://scholarworks.umt.edu/tme/vol12/iss1/7