Gambler's conceit

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Gambler's conceit is defined by economist David Ewing as the mistaken belief that one will be able to stop performing a risky action while one continues to succeed or win at it. This belief frequently arises during games of chance, such as casino games, or stock market trading. The individual believes they will be a net winner at the game, and able to avoid gambler's ruin, by exerting the self-control necessary to stop playing while still ahead in winnings. This is frequently expressed as "I'll stop when I'm ahead." This is irrational since the action contributing to the winning situation (ie. playing) is continuing to produce the desired result and further is being rewarded.

However, since most casino games have a house edge, and if the individual is winning in such a game, he does in fact "beat the house" if he leaves. If said gambler were to continue betting then he would succumb to gambler's ruin. Eventually he would lose all his money, so by quitting the game, he is taking money out of the game which was the house's and is statistically favored for the house to win back. This situation can be seen in the Martin Scorsese movie Casino where Robert De Niro's character makes sure that a high stakes gambler continues to gamble to ensure that the money he won goes back to the casino. On a smaller scale, this situation is seen whenever a winning gambler is offered a drink "on the house" to encourage him or her to keep gambling.

Once in the throes of a winning streak the individual may become convinced that it is their skill, not blind chance, causing their winnings, or good luck on their side, and thus it seems be senseless to stop while still continuing to win. The gambler's conceit is frequently paired with the gambler's fallacy, convincing losing players that it is necessary to continue playing because their luck must soon turn accordingly.

Another example of "Gambler's Conceit" is in cases of harmful physical addictions, such as smoking, alcohol, or heroin. Although physical ailments or death are nearly certain if the addict continues to use, the addict rationalizes that they'll be able to quit before becoming ill, while still receiving the benefit of their physical addiction until then. Thus, while continuing a risky action the addict believes they will be able to stop while continuing to perform it.