I think that what is going on is roughly something like this. People know that “Gambling is bad.”, it can lead to addiction, and people who engage heavily with lots of gambling can mess up their lives.
So, a useful heuristic is “don’t gamble”, which is probably what most young people are either explicitly or implicitly told as children. So, the first experiment is really measuring whether $5 in expected winnings is enough to overcome people’s trained aversion to casinos and gambling. You may as well be offering them $5 in exchange for trying a cigarette, I think that is the close analogy. By accepting this bet they are adopting a policy which says that sometimes gambling is OK, and they recognise that this policy is potentially dangerous, and that changing a general life policy, with all the due diligence that should rightly be afforded to that, is worth less than an expected $5.
When they see the second bet the potential winnings are so huge that it swamps that. Even if they value the general heuristic at $1000 they still take the bet. And besides this is such an outlier of a bet that is doesn’t have to imply a general change in policy. And if they win they are not exactly going to need to ever gamble again anyway.
If I am right there are probably ways of re-structuring the game that would make it look less like gambling, and those tricks would significantly change people’s behaviour.
I think that what is going on is roughly something like this. People know that “Gambling is bad.”, it can lead to addiction, and people who engage heavily with lots of gambling can mess up their lives.
So, a useful heuristic is “don’t gamble”, which is probably what most young people are either explicitly or implicitly told as children. So, the first experiment is really measuring whether $5 in expected winnings is enough to overcome people’s trained aversion to casinos and gambling. You may as well be offering them $5 in exchange for trying a cigarette, I think that is the close analogy. By accepting this bet they are adopting a policy which says that sometimes gambling is OK, and they recognise that this policy is potentially dangerous, and that changing a general life policy, with all the due diligence that should rightly be afforded to that, is worth less than an expected $5.
When they see the second bet the potential winnings are so huge that it swamps that. Even if they value the general heuristic at $1000 they still take the bet. And besides this is such an outlier of a bet that is doesn’t have to imply a general change in policy. And if they win they are not exactly going to need to ever gamble again anyway.
If I am right there are probably ways of re-structuring the game that would make it look less like gambling, and those tricks would significantly change people’s behaviour.