The Timeform Knowledge: The psychology of betting

Simon Rowlands examines the psychology of betting
Simon Rowlands examines the psychology of betting

In the latest edition of the Timeform Knowledge, Simon Rowlands looks at the impact of cognitive biases when it comes to betting.

Unless you hand over all betting responsibility to algorithms and "bots" (robotic software), or to another human - the doing of which involves making a choice in itself - the unavoidable fact is that you will have to make decisions, and those decisions will be influenced by the way in which you think...

It is difficult to be involved in betting for any length of time and to any degree of seriousness without considering the role played in the activity by cognitive biases and psychology.

Unless you hand over all betting responsibility to algorithms and "bots" (robotic software), or to another human - the doing of which involves making a choice in itself - the unavoidable fact is that you will have to make decisions, and those decisions will be influenced by the way in which you think.

The betting edifice is, as we are often reminded, a broad one. It caters for the highly rational and serious to the superstitious and purely recreational. Even highly rational bettors are prone to so-called cognitive biases, or instinctive deviations from rationality: it is part and parcel of being human.

It is possible to train yourself to overcome these biases to a greater or lesser degree, and if you want to be a serious bettor then that is recommended. But perhaps the first step is to understand what those biases are.

The following is a by-no-means-exhaustive list of the cognitive biases and heuristics which tend to affect horseracing bettors more than others. Most of them are recognised in the field of psychology (with thanks to Wikipedia), but some of them have been adapted for this module.

cognitive biases.png

Knowing about cognitive biases, and training yourself to avoid them, or to use them to your advantage, is one thing, but avoiding the psychology of betting more widely is impossible. We are all human and have preferences for security or risk, or capacities for instinctive or rational thought, that are deeply ingrained and specific to us.

It is easier to change one's specific behaviours than to change oneself.

When all is said and done, it may well be best to engage with betting in a manner which plays to your existing strengths, rather than to try to change what those strengths are. This is a message that comes through loud and clear from many successful bettors.

If you are the sort of person who requires regular positive reinforcement, then backing 33/1 shots once or twice a week may not be for you if you want to avoid becoming a nervous wreck.

On the other hand, if you have the sort of temperament and self-belief which are not rattled by long losing runs then you may find you are well suited to siding with horses at big odds that others tend to ignore and/or misprice.

Working outside your psychological comfort zone may well result in you making bad decisions when things do not go well, or even when they go too well. To err is human. But erring is likely to happen less if you are in control and feel comfortable with what it is you are doing.

"Cognitive Biases and the Psychology of Betting" could easily run to tens of thousands of words, and the above is intended only to whet the appetite for what is a fascinating subject. Anyone wishing to learn more about cognition in general could do a lot worse than read "Thinking, Fast and Slow", by Nobel Prize winner Daniel Kahneman.

One cognitive bias not mentioned above but which appears highly important in its various shapes and forms to those who bet is the "Sunk-Cost Fallacy".

This has been defined as "the reasoning that further investment is warranted, based on the fact that the resources already invested will be lost otherwise, without taking into consideration the overall losses involved in the further investment".

In betting, the sunk-cost fallacy, or its close relatives, is seen in such phenomena as: undue attachment to individual horses ("I backed X the last Y times and couldn't bear to see X win unbacked now"); chasing losses (where irrational judgements are made in order to try to recoup previous losses); and what might be termed "premature-commitment bias" (whereby an earlier position is clung to despite evidence which suggests it should be dropped: it is widespread in the lead-up to the Cheltenham Festival with so many ante-post commitments and preview nights).

There is also a tendency to overstate the significance of one small area of the wider discipline of racing analysis - such as speed figures or paddock inspection - if you have invested, or "sunk", a lot of time and effort in that area.

Perhaps one of the starkest - and, to some no doubt, amusing - examples of the sunk-cost fallacy came in a recent news report, not about betting, but about a woman attempting to transit through Beijing Airport with a £120 bottle of cognac in her hand luggage.

Faced with either having to throw the bottle away, or with drinking the contents, she opted for the latter, became "incredibly drunk", was removed by security, ended up collapsed in a wheelchair and missed her flight.

Sometimes, surely it is best to draw a line under past investments, or costs which have been "sunk", and cut one's losses by moving on to the next bet, or the next flight, with a fresh and sober approach?!

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