While
reading for my managing finances blog, I came across an interesting story, in a
book called “WHY SMART PEOPLE MAKE BIG MONEY MISTAKES”. I realized that I myself
fall in the same category. In general, people do not treat all dollars equally
because of their mental accounting or calculations in their minds.
Here
goes the story, a newlywed couple after spending $1000 of gambling allowance at
the third day in Las Vegas for their honey moon, came to their bedroom to
sleep. The bride went to sleep and the groom noticed a $5 chip on the dresser
(the chip referred here as the chip use to play for roulette table). The groom
noticed a number 17 shining on the chip, he quickly put on his robe and rushed
down to the casino at the roulette table and put his chip on the square marked
17. Luckily the ball hit 17 and the 35_1 bet paid him $175. He let his luck
ride on the path of winning; he again played for number 17 and won until he comes
to the figure of $7.5 million. The groom was informed by the manager of the casino
that the casino did not have much money to pay him if the ball hit 17 again. The
groom rushed for a taxi and went to a better financed casino to play more. He once
again bet all of his money for number 17 and ball hit the same number, making
the fortune of $262 million. The overjoyed groom let his millions ride and the
ball hit number 18 this time. Sad and broke groom walked back several blocks to
his hotel. When questioned by his wife, the groom told his wife that he was
playing roulette. “How did you do? Not bad. I lost five dollars (Belsky and
Gilovich 32).”
Whether you agree or not but the majority of people do
think like the groom. The money won by playing at any casino is usually not
real money and the groom’s losses were not the real losses. The groom could
have stopped playing and had bought a brand new Rolls-Royce and still be a
happy millionaire. It all depends how people see and consider the value of
every dollar in their mental accounting.
Belskey, Gary, and Thomas Gilovich. NOT ALL DOLLARS ARE CREATED EQUAL. New York: SIMON & SCHUSTER, 1999. 31-34. Print.
Actually, didn't the groom and wife lose $1,005? I think the scenario is interesting but impossible to replicate. I'm sure there are some statistics generators, but what are the odds that the number 17 would his so many times in a row in roulette?
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