Nudging investors big and small toward better decisions.

Investors significantly reduce their future returns by selecting mutual funds with higher fees, allured by higher past returns that do not predict future performance. This suboptimal behavior, which can roughly halve an investor’s retirement savings, is driven by 2 psychological factors. One factor is difficulty comprehending rate information, which is critical given that mutual fund fees and returns are typically communicated in percentages. A second factor is devaluing small differences in returns or fees (i.e., a peanuts effect). These 2 factors interact such that large investors benefit when fees are stated in currency (as opposed to percentages), whereas small investors benefit from returns stated in currency. These striking results suggest behavioral interventions that are tailored specifically for small and large investors

Dark nudges in gambling

‘Nudge’ has come into common usage in behavioral science, the intersection of psychology and economics, for situations where a ‘choice architect’ aligns a system with consumers’ best long - term interests (Thaler & Sunstein, 2008). A cafeteria designer might ‘nudge’ her customers by placing the salad bar centrally, while relegating unhealthier foods to a corner. In this editorial I argue that, in gambling, nudging works differently. Gambling’s ‘dark nudges’ are designed to exploit gamblers’ biases, as economic rationality on the part of gambling firms predicts. Gambling’s dark nudges reveal the contradictions of industry - led responsible gambling initiatives, and show how stronger regulation is required to reverse gambling’s spiralling public health costs (Korn & Shaffer, 1999; Livingstone & Adams, 2011; Markham & Young, 2015; Orford, 2005; Orford, 2010

Impact of the "when the fun stops, stop" gambling message on online gambling behaviour: a randomised, online experimental study

Background: Safer gambling messages are a common freedom-preserving method of protecting individuals from gambling-related harm. Yet, there is little independent and rigorous evidence assessing the effectiveness of safer gambling messages. In our study, we aimed to test the effect of the historically most commonly-used UK safer gambling message on concurrent gambling behaviour of people who gamble in the UK. / Methods: In this study, three preregistered, incentivised, and randomised online experiments, testing the UK's “when the fun stops, stop” message, were carried out via the crowdsourcing platform Prolific. Adults based in the UK who had previously participated in the gambling activities relevant to each experiment were eligible to participate. Experiments 1 and 3 involved bets on real soccer events, and experiment 2 used a commercially available online roulette game. Safer gambling message presence was varied between participants in each experiment. In experiment 2, exposed participants could be shown either a yellow or a black-and-white version of the safer gambling message. Participants were provided with a monetary endowment with which they were allowed to bet. Any of this money not bet was afterwards paid to participants as a bonus, in addition to the payouts from any winning bets. In experiment 2 participants had the opportunity to re-wager any winnings from the roulette game. The primary outcome in experiment 1 was participants’ decisions to accept (or reject) a series of football bets, which varied in their specificity (and payoffs), and the primary outcomes of experiments 2 and 3 were the proportion of available funds bet, which were defined as the total amount of money bet by a participant out of the total that could have been bet. / Findings: Participants for all three experiments were recruited between May 17, 2019, and Oct 17, 2020. Of the 506 participants in experiment 1, 41·3% of available bets were made by the 254 participants in the gambling message condition, which was not significantly different (p=0·15, odds ratio 1·22 [95% CI 0·93 to 1·61]) to the 37·8% of available bets made by the 252 participants in the control condition. In experiment 2, the only credible difference between conditions was that the 501 participants in the condition with the yellow version of the gambling message bet 3·64% (95% Bayesian credibility interval 0·00% to 7·27%) more of available funds left over than the 499 participants in the control condition. There were no credible differences between the bets made by the 500 participants in the black-and-white gambling message condition and the other conditions. In experiment 3, there were no credible differences between the 502 participants in the gambling message condition and the 501 participants in the control condition, with the largest effect being a 5·87% (95% Bayesian credibility interval –1·44% to 13·20%) increase in the probability of betting everything in the gambling message condition. / Interpretation: In our study, no evidence was found for a protective effect of the most common UK safer gambling message. Alternative interventions should be considered as part of an evidence-based public health approach to reducing gambling-related harm. / Funding: University of Warwick, British Academy and Leverhume, Swiss National Science Foundation

A speed-of-play limit reduces gambling expenditure in an online roulette game: Results of an online experiment

UK online casino games are presently not subject to any limitations on speed-of-play or stakes. One recent policy proposal is to ensure that no online casino game can be played faster than its in-person equivalent. Another policy proposal is to limit the maximum stakes on online casino games to £2, to match the current stake limit on electronic gambling machines. This research experimentally investigated the speed-of-play proposal subject to a £2 stake limit, in an online experiment using incentivized payouts based on £4 endowments and a commercial online roulette game, which was slowed-down in one condition to enforce a speed-of-play limit of one spin every 60 seconds. UK residents, aged 18 years and over and with experience in playing online roulette (N = 1,002), were recruited from an online crowdsourcing panel. In the slowed-down condition there was a credible reduction in the amount gambled. This effect occurred via a credible reduction in the mean number of spins which outweighed any potential increases in bet sizes. Speed-of-play limits may be effective in reducing gambling expenditure for online roulette

Betting is loving and bettors are predators: a conceptual metaphor approach to online sports betting advertising

The legalisation of online gambling in multiple territories has caused a growth in the exposure of consumers to online sports betting (OSB) advertising. While some efforts have been made to understand the visible structure of betting promotional messages, little is known about the latent components of OSB advertisements. The present study sought to address this issue by examining the metaphorical conceptualisation of OSB advertising. A sample of Spanish and British television OSB advertisements from 2014 to 2016 was analysed (N = 133). Following Lakoff and Johnson’s conceptual metaphor theory, four main structural metaphors that shaped how OSB advertising can be understood were identified: betting as (1) an act of love, (2) a market, (3) a sport, and (4) a natural environment. In general, these metaphors, which were found widely across 29 different betting brands, facilitated the perception of bettors as active players, with an executive role in the sport events bet upon, and greater control over bet outcomes

Percentage and Currency Framing of House-Edge Gambling Warning Labels

All commercial gambling games are constructed so that the gamblers will on average lose money over time. This fact is often communicated to gamblers on virtual gambling games as the “return-to-player.” A return-to-player of 90% means that for every £100 bet, on average £90 is paid back out in prizes. In previous work, gamblers were better informed, and perceived a lower chance of winning, when this information was equivalently reframed as a “house-edge” of 10%, whereby the game keeps 10% of all money bet on average. This paper explores whether there are further risk communication advantages to using currency framing for the house-edge format, by directly stating the amount kept as: “This game keeps £10 for every £100 bet on average.” Online gamblers (N = 1,007) reported their perceived chances of winning for hypothetical games with house-edges of either 0.5%, 7.5%, or 15%, presented as either percentages or currency units. Gamblers’ perceived chances of winning were only minimally affected by this framing of house-edge information