In betting world there is a term called crash course in betting psychology. This will be explained more in detail bellow in the text. But, the reasons for such a term are numerous aspects a person faces when trying to make money by betting in sports. There is a whole study developed in this area, which is a clear indication of how your mindset can affect your profit from betting. Furthermore, what are the usual mistakes one does while betting and how they can avoid making them, and maybe the most important aspect, who is in control of the whole betting process – do you control your actions or is it vice versa?
There is a thing called the rational choice theory which is in a way the basis of our whole existence as human beings, mentally superior to all the other animals. This is all because of our innate ability to make rational choices. Every time we think how to get the most out of a situation, while at the same time invest as less as possible. While this theory makes perfect sense on paper, in practice things work a little bit differently.
Let’s test the rational choice theory
Preference may be defined as the ordering of the alternatives based on their relative utility, i.e. satisfaction derived or reward. If Cathy, an adult person, prefers banana to peaches and peaches to apples, it is sure to say that when given to choose from these three fruits, she will go for banana.
Let’s imagine that Cathy is attending a party where, as a dessert, fruit is offered. On one side there are banana slices, and on the other side, there are apples cut in halves. Logically, Cathy goes for the bananas, but at the same time two other kids run to get the bananas. Cathy then divides the banana slices in two portions and teaches the kids the lesson about sharing, before settling for the apples.
According to psychology, the satisfaction Cathy would get from making two kids happy is greater than the satisfaction she would get from eating the banana and thus, she makes and irrational choice to take the apples. In betting terms, this means that it is an irrational assumption if you blindly believe that just because you made a choice to bet for money, you will also act accordingly.
Now, here’s another situation and see what Cathy would choose in a different context. Let’s imagine she is an over-spender and one week before pay day she is already in overdraft and angry about her spending habits. On her way to the park, she meets a friend named Harry who is eating cinnamon topped apples and offers to share it with her. She would love to join him in this treat; however, she would prefer the bananas and vanilla ice-cream, topped with chocolate syrup. Unfortunately, this treat of her choice will cost her money she does not have at the moment and settles for the apples with cinnamon in the end. Would you bet that she would settle for the free apples one day after the pay day?
The hint is that in order to control your actions in betting, you should always place bets based on their Expected Value, and not based on your feelings and assumptions because you set yourself to make money in sports betting. Expected Value is a predicted value of a variable, calculated as the sum of all possible values each multiplied by the probability of its occurrence. In betting, expected value (EV) is the measure of what a bettor can expect to win or lose per bet placed on the same odds time and time again.
And the story with Cathy moves forward. Pay-day has come and she is determined not to go into negative in her account anymore and gain control over her spending habits. Therefore, she reads a book on how to manage this. She calculates the maximum allowance of her daily budget and makes a grocery list to buy in the supermarket. After completing her shop, it turns out she has another $2 dollars to spend and to make a choice between bananas, which is $2.50, peaches, which is $2 and apples, which is $2. As she determined to control her feelings, she chooses peaches and is satisfied about her ability to stay disciplined.
How big a role does irrationality play in betting?
The golden rule is that just because you said you want something, it doesn’t mean you will act accordingly. The choices are always affected by context, alternatives, finances, timing, goals and ambition. Thus, it is irrationally to think that just because you want to make money from betting, you will act accordingly. This brings us to the very aspect of rationality, and the second golden rule is that rationality may be considered as a superpower since it is so rare.
This can be explained with betting on a team to score Over 2.5 goals just because in the last match they easily scored 4 goals against a strong team and now they are playing against a weaker team. The logic behind this assumption is wrong and biased.
There is another term that is present in this betting psychology: gambler’s fallacy. Gambler’s fallacy happens when a bettor increases his stake after a series of losses because he thinks that it is time for his luck to change. This and a series of other cognitive biases constantly make bettors lose money.
The unfortunate thing is that you cannot overcome all these biases. The best you can do is control your actions and place bets based on their Expected Value, while at the same time not taking your feelings into account.
What’s the deal for you?
Before betting, you should settle with yourself what for you are there. If betting for you is an adrenaline rush, occasional win, way of socializing etc., then you can freely rely on your gut feeling and enjoy the entertainment. But always keep in mind to spend as much money as you can afford.
On the other hand, if your purpose in betting is to win money and make huge profits, then calculating the Expected Value should be your guiding principle and not assumptions and feelings. Money making is a business and businesses do not rely on assumptions, but on calculations.