As I suggested at the time, most research has been of a clinical underpinning investigating the psychopathology of gambling addiction. However, few areas of research have been specifically conducted about gambling psychology in terms of how this knowledge may be used as a tool of advantage. It is interesting to consider stereotypical behaviour or fixed-action patterns which social psychological research has investigated in its applications of business and influence but brings a fascinating angle to gambling, too.
One aspect is the contrast principle, which hypothesizes that people often over compensate when judging variables. This is apparent when assessing form lines - where two form horses re-oppose. The contrast theory suggests that the outsider of the two could be of more interest than we imagine. Clearly, it is not surprising that the previously beaten horse is a bigger price, but the contrast principle suggests that the less fancied of the two could be a dramatically inflated price, which may bring about value.
How many times have you seen a horse beaten on a previous occasion reverse the form? It happens every day! The next time it happens, take a closer look at the starting price. It is often the case, they win at substantially bigger odds than you would have imagined, even when beaten by a narrow margin in a previous contest.
Clearly each horse needs to be considered on its own merit and have reason(s) why an improved performance may be on the cards. One area that is ideal for this psychological factor is when a two-year-old is beaten on its debut against an experienced juvenile. From understanding basic statistics, we know it is much more difficult for a horse to win on debut and that potential improvement is often forthcoming. If re-opposing an old adversary, this psychological phenomenon could well relate to a much greater price as layers/bookmakers have a tendency to over compensate.
I will look for a few more psychological examples that may apply to gambling because they make quite thought provoking statements.