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Gamblers Learn from Experience

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  • Joshua E. Blumenstock
  • Matthew Olckers

Abstract

Mobile phone-based sports betting has exploded in popularity in many African countries. Commentators worry that low-ability gamblers will not learn from experience, and may rely on debt to gamble. Using data on financial transactions for over 50 000 Kenyan smartphone users, we find that gamblers do learn from experience. Gamblers are less likely to bet following poor results and more likely to bet following good results. The reaction to positive and negative feedback is of equal magnitude and is consistent with a model of Bayesian updating. Using an instrumental variables strategy, we find no evidence that increased gambling leads to increased debt.

Suggested Citation

  • Joshua E. Blumenstock & Matthew Olckers, 2020. "Gamblers Learn from Experience," Papers 2011.00432, arXiv.org, revised Aug 2021.
  • Handle: RePEc:arx:papers:2011.00432
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    References listed on IDEAS

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    Cited by:

    1. Martin Chegere & Paolo Falco & Marco Nieddiu & Lorenzo Pandolfi & Mattea Stein, 2022. "The Magic of the Game:Experimental Evidence on Sports Betting Behavior," CSEF Working Papers 655, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 15 Nov 2024.

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    More about this item

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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