Tuesday, November 9, 2010

Robbed by the One – Armed Bandit

Over the course of evolution, our brains have adapted to try and predict the outcomes of certain events. We make predictions, compare them to what actually happens, and then learn from error and adjust. When we make correct predictions, our body possesses a mechanism to ensure that we continue to do so: the reward areas of our brain. The brain’s reward circuitry releases the neurotransmitter dopamine, the chemical responsible for the pleasures we feel from sex, drugs, alcohol, music, chocolate, love, and even gambling. If we receive a positive outcome as a result of our actions (reinforcement), then we will repeat our behaviors.

The more “off-target” that our predictions are, the faster we will learn because as a species, we don’t like to be wrong. In fact, human beings do not like being wrong so much, that the fear of losing can be considered even greater than the pleasures of winning. Loss-aversion is a key factor that drives our everyday decisions; we are much more willing to settle for a lesser, guaranteed reward, than a reward of greater magnitude for which there is a risk of losing. So it is within the boundaries of human nature to avoid losses at all costs…with the exception of one circumstance: the “near-miss”.

What is a “near miss”? Imagine yourself in front of a slot machine, pulling the arm, as you’re watching the colors of each of the characters whiz by in a blur. Bing...Bing...Bing. You’ve managed to match two pictures in a row, but the third one is just one away from the desired spot, and now you’re itching to try for it again. That is a “near miss”. “Near misses” are extremely addictive, because they raise activity in the exact same reward circuitry of the brain as wins do (perhaps suggesting that if the behavior continues, a win is soon to follow). Wins activate reward pathways in the midbrain, as well as losses that could be considered a “near-misses”. People will continue to return to the slots after a near miss due to a sense of reward, leading to addictive behavior. For problem gamblers, the activation of these specific brain areas is even more enhanced than in casual gamblers.

Our evolutionary flaw is that, while the brain is efficient in most circumstances, it will try desperately to fit occurrences of “random chance” into a predictable model, striving to figure out explanations for what there is simply no explanation for. Unfortunately, this makes our brains fully capable of misinterpreting information, and so we may be fooled into making a decision that is not logically sound, overwhelmed by a rush of emotion from dopamine.

“Although near-misses while playing a slot machine felt less pleasant than wins, they increased the desire to play just as much as long as players felt they had some control over their spins—supporting the idea that the illusion of skill underlies the phenomenon,” says Luke Clark of the University of Cambridge. People who play the lottery or stock machines often confuse phenomena resulting from pure chance (wins/losses) with those that are caused by personal skill and ability. The key here is that the gambler believes that he is at least partially in charge: that some type of his personal skill is involved. This convinces gamblers to try their luck, even after several consecutive “near-misses”.

Think about it. This is essentially the power to convince someone, at least at the neurological level, that they have won without actually letting them win…a dangerous idea, but a reality that has not gone unnoticed by business. Businesses (particularly casinos) and slot-machine makers actually use virtual reels to create a high number of “near-misses”. While your neurons desperately attempt to decode the “logic of luck”, you keep emptying your bucket, feeding the one-armed bandit more quarters...business is booming.

It is common belief that emotions derail us from logic, inhibiting us from our ability to reason. Yet, without emotion we would be indecisive, forced to analyze every possible option. Emotions may provide us with the impetus to make our decisions, but when our emotions are out of control, perhaps we are just as good without them.

To read more click this link:

http://www.newsweek.com/2010/05/11/hit-me-again-the-gambling-brain.html

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