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|The nature of high risk investing: risky business or gambling?
|Arthur, Jennifer Nicole
Williams, Jennifer Nicole
|School of Psychology
|This thesis seeks to understand the theoretical and empirical relationship between gambling and financial market speculation. More specifically, are there fundamental conceptual differences between engaging in traditional forms of gambling, such as sports betting and electronic gambling machines, and engaging in speculative activities on the financial markets such as day trading and penny stocks? And, regardless of whether conceptual differences exist, a) To what extent do traditional gamblers engage in financial market speculation and vice versa?, and b) What individual differences, if any, predict engagement in one but not the other? In a series of four studies this thesis documents that gambling is conceptually distinct from investment, but that financial speculation is conceptually intermediate between gambling and investment. Consistent with the conceptual overlap between gambling and speculation, the studies within this thesis show there to be a strong empirical relationship at both the population level and individual level between these two activities. In general, the large majority of speculators also appear to engage in traditional forms of gambling, particularly skill-based formats. An important reason for this overlap is that skill-based gambling and speculation are very similar to each other. Because of the similarity in their nature, they tend to attract similar types of people. A central feature of both gamblers and speculators is having a propensity for taking risk, and secondarily, having an excitement-seeking orientation. Speculators and skill-based gamblers also both share cognitive biases of overconfidence, a tendency to confirm rather than disconfirm beliefs, illusion of control, gravitation toward products with low participation costs and high potential returns, and being highly loss-averse. Although the large majority of speculators are involved in gambling, only a minority of gamblers are involved in financial speculation. The likely reason for this difference is likely that most skill-based gamblers do not perceive themselves to have the level of knowledge, experience, or income needed for financial speculation. Consistent with this contention, age, educational attainment, and income are the demographic variables that most strongly discriminate between speculators and gamblers.
|Thesis (Ph.D.) (Research by Publication) -- University of Adelaide, School of Psychology, 2018.
|This electronic version is made publicly available by the University of Adelaide in accordance with its open access policy for student theses. Copyright in this thesis remains with the author. This thesis may incorporate third party material which has been used by the author pursuant to Fair Dealing exceptions. If you are the owner of any included third party copyright material you wish to be removed from this electronic version, please complete the take down form located at: http://www.adelaide.edu.au/legals
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