An emotional hedge is a psychological and financial strategy used to mitigate potential negative emotions by offsetting a personally significant outcome with a compensatory action.[1] The concept is most commonly applied in sports betting, where an individual places a wager against their favored team.[2] If the team wins, the emotional satisfaction compensates for the financial loss; if the team loses, the financial gain cushions the emotional disappointment.[3][4]
Reluctance
editDespite the fact that the emotional hedge guarantees the bettor one positive outcome, it is rarely observed. Optimism bias, in which the probability of a positive outcome is overestimated by an emotionally-driven bettor, plays a part in many people's decision not to make the bet.[5] In sports betting, many are also reluctant to make the bet because they feel that it is disloyal to their favorite team.[6]
See also
editReferences
edit- ^ Ambrose, Charles (17 May 2023). "Theory of emotional hedging in behavioural finance". Times of India. Retrieved 18 September 2024.
- ^ Millman, Chad (13 January 2010). "The power of the emotional hedge bet". ESPN. Retrieved 31 March 2021.
- ^ "The Emotional Hedge Bet". First Off The Bench. 16 February 2011. Retrieved 31 March 2021.
- ^ Ayello, Jim (29 December 2020). "The emotional hedge bet: What it is and why Colts fans need to place it before Sunday". The Indianapolis Star. Retrieved 31 March 2021.
- ^ "Emotional Hedge". The Unchained Banker. 2 February 2020. Retrieved 18 July 2022.
- ^ Morewedge, Carey K. (14 October 2016). "Why You Should Bet Against Your Candidate". The New York Times. Retrieved 31 March 2021.
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