The game of blackjack is popular in casinos and has become a common card-game in many homes. It is one of the few casino games that is symmetric for the player and dealer, meaning that an optimal strategy exists to reduce the house edge. This game is also a favorite among students of behavioural economics because it is a simple game that can be easily understood and applied to the real world.
To begin playing, each player must place his or her bet in the betting box on the table. Once all bets are placed, the dealer will shuffle and ask that the players cut the cards. Once the deck is cut, the dealer will deal each player two cards face up. Players then decide whether to hit (ask for another card) or stand (keep the current hand). A player who has an Ace and a 10 point card (such as a King, Queen, or Jack) has a blackjack, which pays out 1:1. A player who has a blackjack must win the round against the dealer, but if the dealer has a blackjack, the players who have a blackjack will push (get their original bet back).
If a player wants to change his or her bet, he must gesture a hit to the table. The dealer will then give the player the next card, and the player may repeat the hit process until he or she is satisfied with their hand. If a player is not satisfied with their hand, they may ask to leave the table or call the floor manager for assistance.
Once all players have decided to either hit or stand, the dealer will reveal his or her hidden second card. If the dealer’s total is 16 or lower, the dealer must hit and take a third card. If the dealer’s total is 17 or higher, the dealer must stand. If a player’s hand is closer to 21 than the dealer’s, the player wins and is paid out 1:1. If the dealer has a blackjack, all players lose unless they have a blackjack themselves.
To test the hypothesis that confidence is a mediator of these psychological and behavioral consequences, we used an experimental design to manipulate participants’ blackjack confidence levels independently of their actual knowledge. We found that greater unjustified confidence correlated with higher outcome expectations and lowered state anxiety, but also led to larger bets (a measure of risk taking) and less information search and consideration by the participants. These results suggest that it is important for educational interventions to consider the impact of confidence on behavior independent of the underlying knowledge level. This finding is especially pertinent when the domain of knowledge is risky, such as in blackjack or in other gambling contexts. It is also applicable to other domains where confidence can be detrimental, such as when consumers take out loans for home repairs or insurance policies. These findings have implications for a broad range of applications, including educational efforts to promote financial capability.