Is the Dunning-Kruger Effect Impacting Your Gambling?

There are literally dozens of cognitive biases that impact the decisions we make on a regular basis.  When these cognitive biases get in the way of smart gambling decisions, they can cost you money. 

One cognitive bias that you may not know about is the Dunning-Kruger Effect.

The Dunning-Kruger Effect is a tendency for unskilled individuals to overrate their abilities while skilled individuals do the opposite.

There are a number of ways that these cognitive biases can influence you when you are gambling or learning how to gamble.  The unfortunate thing about it is that it can be really hard to figure out when you (or someone else) is subject to it.  Recognising you are unskilled when you think you are good at what you do is intensely painful.  Your pride can get in the way, preventing clear insight.

Ironically, something similar can happen if you are better at what you do than you realise.  Because you have your sights set so high and your pride is on the line, you may continuously get down on yourself and underestimate your abilities.

Here are just a few of the problems that can come from overestimating ability:

• You could get bad advice from someone else who is subject to the Dunning-Kruger Effect.  This happens a lot to newbies who are trying to learn a challenging and complex game like poker or baccarat.  Remember, not every person who thinks they are James Bond really is. 

• If you overestimate your own ability, you might leap into gambling before you really know what you are doing.  This can result in substantial drawdown.  Worse, it can go on for quite a while before you are willing to admit to yourself that you are not as skilled as you think. 

• Overestimating your skills may lead you into a manic, prideful emotional state where you constantly “need to be right.”  Desperate to prove yourself, you might go on tilt. 

Here are just a few of the issues that can arise when you underestimate ability:

• You could second-guess your own good judgment.  Remember those people who give you bad advice and pretend that they are experts?  Nothing is worse than choosing to believe those people over the evidence of your own practice and experiences.  If your insights clash with the advice you receive, always seek to develop your own expert knowledge rather than borrow someone else’s.  Sometimes you may be wrong—but you may be right more often than you think.

• You may hold yourself back from situations you can handle.  While people who overrate their skills are likely to throw themselves irresponsibly into gambles they cannot really handle, those who underrate their abilities are likely to do just the opposite.  You might sit on the fence for a really long time before you really put yourself out there and take a risk.  You might avoid playing games you can actually win or refuse to put down stakes you can easily afford.  This can hold you back indefinitely if you aren’t careful.

• You may try to fix systems that are not broken.  For example, you might have a poker system which gets pretty good results, and you are relatively adept at using it.  But because you underrate your skills and your successes, you keep making pointless and sometimes damaging adjustments.  These may result in losing money.

• Low self-esteem can lead to all kinds of messes.  If low self-esteem is part of what causes you to underrate yourself, there is no end to the trouble it can cause.  It may cause you to second-guess smart decisions and avoid risk as already discussed.  But it can also lead you down an emotional whirlpool which can lead to going on tilt.

If the Dunning-Kruger Effect is distorting your perception of yourself and others, it can really take a toll on your gambling.  Yes, it can be challenging to accept that you might be less or more skilled than you realise, but it is worth it to overcome your problems with pride and self-esteem.  In the long run, it will save you a lot of money and headaches.

Learn about other cognitive biases that can affect your judgment when betting on UK betting websites:

• Focusing effect
• Clustering illusion
• Confirmation bias and 
• The Green Lumber Fallacy.