Friday 13th win: illustration of "magical thinking", a classic bias in behavioural finance
Behavioural finance is defined by the application of psychology to finance: it differs from classical financial theory by considering individuals not as purely rational beings, but as being influenced by their emotions or by reasoning biases.
Who will win between the lottery and Spirou?
Friday the 13th is always awaited with some impatience by the Française des Jeux (French lottery operator). And for good reason! It sees the number of lottery players almost double and the number of bets in scratch games increase by about 20%. Although this phenomenon repeats itself every Friday 13th, it does not seem rational for all that. For example, considering that an individual has statistically as much chance of winning on Friday the 13th as any other day of the year, it is difficult to see the logic behind this phenomenon other than to attribute it to emotional reactions. This rush to gamble on this particular day reflects above all a tendency to "magical thinking", a well-known bias in Behavioral Finance.
This bias is defined as the belief that one can influence the course of events, in particular through false cause-and-effect relationships: "I'm gambling on Friday the 13th, I have a better chance of winning! ». This tendency, which is particularly evident in gambling, was studied by Ellen Langer ("The illusion of control", 1975) with the following empirical conclusions: a player who is free to choose his or her lottery ticket (and therefore his or her number) bet on average four times more than when the ticket is imposed on him or her. Moreover, only 63% of players were willing to give up the freely chosen ticket, compared with 81% of those who had been given a number imposed on them. Finally, the resale price of this ticket was four times higher when the ticket (and therefore the number) had been chosen by its holder! Generally speaking, the number 13 does not leave one indifferent: absence of room 13 in some hospitals, absence of thirteenth floor in some towers ... On the contrary, the Spirou comic magazine is known for its page "12 bis" aiming to ... make a mockery of this superstition!
Back to childhood.. to the detriment of financial performance!
In fact, it is between the ages of five and seven that human beings are most sensitive to magical thoughts! But on the other hand, when we reach tBack to childhood.. to the detriment of financial performance!he age of managing our personal finances, this tendency unfortunately leads us to a denial of reality! If it is not enough to cheer on a sportsman behind the television to see him win, it is not enough to yearn for a sharp rise in the value of an investment to see it magically appreciate. In concrete terms, the refusal to sell a financial asset that is undervalued and has no potential for rebounding is undoubtedly one of the main negative consequences of this bias on the management of personal finances. Victims of this trend, some individuals may also be led to make unfortunate investment decisions, based mainly on irrational expectations of gains. More generally, magical thinking delights those who seek to exploit credulity, for example by presenting "miracle" products, whether financial or not.
The wish to be read all the way to the end has come true - probably by dint of saying it! - it remains to wish everyone good luck for the next Friday 13th!