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Lauren Admire | 15 Feb 2010 21:00
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Risky Gamblers May Have Their Brain to Blame

I don't remember which reality TV show it was, but I clearly recall watching a lady in her mid-twenties placing bets at a blackjack table. She had already lost nearly 50,000 dollars and had a friend waiting to pick her up outside of the casino. But she still had 20,000 dollars more to spend, and she wasn't going anywhere until she had gambled it all. She lost all her money. I remember thinking there must be something seriously wrong with her.

As it turns out, there probably was. There's a newly discovered and rare genetic disorder that makes people less troubled over losing money and other valuable items. A part of the brain called the amygdala controls the arousal of fear and anxiety, both helpful emotions to listen to when you're about to bet away the rest of your money. These dual feelings tell you to slow down, to stop and to avoid risk. The fancy, scientific word for this is "loss aversion," and if your amygdala is happy and healthy, you'll experience a healthy aversion to losing something of value.

"It may be that our amygdale controls a very general biological mechanism for inhibiting risky behavior when outcomes are potentially negative, such as the monetary loss aversion which shapes our everyday financial decisions," explains Dr. Benedetto De Martino, a researcher at the University College London.

The study involved two women with a lesion in their amygdala, a 43 year old who had left school at 18, and a 23 year old who had just finished college. Each woman was given a $50 bill and invited to partake in a very special gambling session, where the odds were the same as a coin flip - about 50/50. A variety of bets were offered, such as "win $5 or lose $20," "win $50 or lose $20," and "win $20 and lose $15."

Placed in this situation, most people would take the money and run. There's no skill involved in this situation, and they're just as likely to lose money as to win it. However, both women gambled without any hesitation.

In his blog The Frontal Cortex, Jonah Lehrer explains the concept of loss aversion in even more depth. It appears that people with "normal" loss aversion levels fear loss so much that they will avoid it any costs. A prime example is the well-known advice of trading in your stocks when they're doing well, while keeping the ones that are depreciating in value. It is a backwards notion: Why fill your stock portfolio with failing, or even neutral stocks, when you can keep the ones that are prospering? "Why do investors do this?" asks Lehrer, "because they are afraid to take a loss-it feels bad - and selling shares that have decreased in value makes the loss tangible. We try to postpone the pain for as long as possible. The end result is more losses."

Thanks for the link, SharedProphet

Sources: Independent.co.uk, Science Daily

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