Baccarat is a casino game with an elegant European heritage. It’s often found tucked away in high-limit gaming areas, but it’s also a simple game to play. You just place a bet on either the “Player” or “Banker” hand, then sit back and let the dealer do the rest. The goal of the game is to get closer to nine than the opposite hand. Tens and lower value cards count as zero, while aces count as one. The winning hand is the one closest to nine.
We recently conducted large-scale field experiments in a casino to examine the impact of customer expectations on betting behavior. Using a naturalistic experiment, we observed that baccarat customers tend to follow trends, predicting future outcomes that are positively correlated with past consecutive outcomes – an effect known as positive recency. This tendency is more common in baccarat than in other gambling games, including blackjack and roulette. Our findings suggest that the belief in positive recency is an important factor driving problem gambling behaviors in baccarat, reinforcing the gambler’s fallacy and other maladaptive strategies.
In baccarat, players choose whether to bet on the Player hand, Banker hand, or tie. The dealer deals two cards to each hand face up, and whoever’s hand total is closest to 9 wins. You can also make side bets on the player pair and banker pair, but they have a higher house edge and require a larger bankroll than regular bets.
Our analysis revealed that when a streak of Player or Banker wins occurs, a majority of customers increase their wagers. However, after a streak of losses, the majority decrease their wagers – suggesting that customers are influenced by a desire to break even or prevent further losses. We believe that this behavior is related to the belief in positive recency, which is a fundamental cognitive bias that leads people to expect that events will be more likely to occur in the future than they are in the past (e.g., the basketball player’s scoring or the coin toss).
It is also possible that baccarat customers interpret the interruption of a streak as a cue that the probability of a particular outcome is changing, but this account needs further exploration with cognitive modeling approaches. Overall, our results offer new insights into the complex interplay of psychological and environmental factors that influence gambling behavior in a casino setting.
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