You Should’ve Seen the Trade That Got Away

Near misses, and why you can’t stop gambling/trading/etc.:

Manufacturers of gambling games have apparently known the rewarding effects of near misses all along, and they design slot machines in such a way as to exploit the cognitive distortions of gamblers. Using a technique called clustering, they create a high number of failures that are close to wins, so that what the player sees is a misrepresentation of the probabilities and randomness that the game involves. The gambler who nearly hits the jackpot will therefore want to continue playing, because he thinks he has a good chance of winning.

More here.

Related posts:

  1. Knowing the Odds vs Playing the Odds
  2. New Comment-Spam URLs Mutating
  3. E-Trade: Good Call, Bad Call, or Alarmism
  4. Jeff Rubin Talks Oil and Trade
  5. Journal of Gambling Studies