An Economic Model of Gambling Behaviour: A Two-Stage Approach

Lachlan Cameron, Jemimah Ride, Nancy Devlin

Research output: Contribution to journalArticleResearchpeer-review

Abstract

Gambling can cause significant harms and these can result in a net negative utility from participation, although lower levels of participation have potential benefits and can yield positive net utility. It is therefore important to understand and distinguish between these two stages of gambling behaviour. Currently, economic models have had limited focus on explaining why someone would gamble despite it yielding a negative utility. Here, we present a two-stage model, motivated by empirical literature and intuitive assumptions, that improves on existing economic models by distinguishing between the likelihood of gambling participation and of gambling that yields a negative utility. The model’s predictions are empirically testable, consistent with existing literature, and add new insights. The model’s ability to distinguish between the two stages helps to inform interventions that aim to reduce the prevalence of gambling-related harm while avoiding the need for restrictive approaches that aim to eliminate gambling altogether.

Original languageEnglish
Pages (from-to)65-81
Number of pages17
JournalJournal of Gambling Studies
Volume40
Issue number1
DOIs
Publication statusPublished - Mar 2024
Externally publishedYes

Keywords

  • Addiction
  • Cognitive bias
  • Decision making
  • Gambling participation
  • Gambling-related harm
  • Intervention

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