Kicking Oneself Under the Blackjack Table
People may prefer inaction to avoid the sharper regret of an explicit mistake. The authors suggest this helps explain blackjack players who stand on 16 against a strong dealer upcard despite a basic-strategy recommendation to hit.
THE IDEA
Kicking Oneself Under the Blackjack Table
We now shift the venue of our examination to the gambling casino. In a fascinating investigation of real-life decision making, Keren and Wagenaar (1985) studied experienced blackjack players in casinos throughout the Netherlands. Blackjack is a game played with an ordinary deck of playing cards, a dealer, and from one to seven players. To begin a round of blackjack, the dealer deals each player two cards facedown and deals him- or herself two cards, one facedown and one faceup. All face cards (kings, queens, jacks) are worth 10 points, other cards are worth the value of the number on the card, and an ace can be counted as either 1 or 11 points. A player may continue to ask for additional cards ("hits") until he or she wants to stop ("stand") or the total of points exceeds 21 ("bust"). The dealer must hit when his or her total hand is 16 or fewer points and stand when his or her total hand is 17 or more points. The player’s object is to accumulate more points than the dealer without busting. After all hands have been played, the dealer pays the amount bet to those players whose totals do not exceed 21 but are higher than the dealer’s hand and collects the amount bet from the players who have busted or whose total is lower than the dealer’s. When a player’s hand equals the dealer’s, that bet is not paid, nor is it collected.
Keren and Wagenaar (1985) compared the playing strategies of the players they observed to an optimal strategy, called Basic, which dictates that a player’s decision to respond hit or stand should be based on not only the total of his or her hand, but also on the value of the dealer’s faceup card. Playing blackjack according to this strategy can reduce a player’s losses to −0.4% of the expected values and is second only to card-counting in effectiveness. The players observed by Keren and Wagenaar generally played optimally, with one striking exception. When a player was holding cards totaling 16 points and the dealer’s upturned card ranged from a 7 through an ace (1 or 11), Basic strategy dictates that the player take another card. (Players lose about 65% of the time whatever they do in this situation, but the odds of winning are increased by taking another card.) However, 84% of the players observed by Keren and Wagenaar chose not to take another card when their card total was 16 points, a strategy contrary to the Basic prescription.
Why might players choose to stand at 16 when doing so reduces their chances of winning? Our analysis suggests one possibility. As noted, when a blackjack player’s cards total 16, the odds are that he or she will lose; but there are two ways of losing, and we propose that they will not be equally painful or equally memorable. The first type of loss involves an act of commission – the player’s taking another card and busting; the second involves an act of omission – the player’s standing and being outdrawn by the dealer. Losses following acts of commission, as discussed previously, can be expected both to produce greater counterfactual regret and to be more memorable. In brief, blackjack players might misjudge the odds of winning (or losing) at 16 by one strategy versus another because the differential counterfactual regret elicited by the two strategies biases players’ memories.
When to use it
Investors holding onto losing stocks to avoid the regret of selling at a loss, even when selling is rational.
Medical professionals opting for less aggressive treatments to avoid the regret of a bad outcome from an intervention.
Consumers avoiding returning a defective product because they dread the hassle and potential regret of the interaction.
Sports coaches choosing conservative strategies (e.g., punting on fourth down) to avoid second-guessing a failed aggressive play.
FROM THEORY TO EVERYDAY LIFE
In practice
Blackjack Players at 16
In a study by Keren and Wagenaar (1985), 84% of experienced blackjack players chose to stand on a hand totaling 16 when the dealer's upcard was 7 or higher, even though the optimal basic strategy advises hitting. The authors propose that busting after hitting, an act of commission, produces sharper regret than losing after standing, an act of omission. That difference might bias memories of the two strategies and make standing feel preferable.
A MOMENT TO REFLECT
Put it to work.
Think of a time you chose not to take an action because you feared the regret of making a mistake more than the regret of missing an opportunity. How did that affect the outcome?
In what other real-world situations — besides gambling — might the pain of commission bias lead people to make suboptimal decisions?
How could you design a decision aid or nudge to help people overcome this bias and focus on the objective probabilities rather than the anticipated regret?
References
- Keren and Wagenaar (1985) — Keren, G. and Wagenaar, W.A. (1985)
CONTINUE THE CONVERSATION
Source texts
- Heuristics and Biases The Psychology of Intuitive Judgment (Thomas Gilovich, Dale Griffin, Daniel Kahneman)