New Study Explores “Gambler’s Fallacy” in Crypto Donations
A new study released this week from a collective of four American business scholars highlights the potential opportunities and risks donors and charities face when dealing with cryptocurrency donations.
In particular, the paper explores how cryptocurrency donors often fall victim to the “gambler’s fallacy,” a false belief that estimates if a certain event has occurred more frequently in the past, it is less likely to happen in the future (and vice versa). Essentially, the “gambler’s fallacy” relies on the idea that past outcomes may indicate the probability of future outcomes, despite the two being wholly separate from one another.
For instance, the researchers found that “participants are more likely to be activated to donate when they have experienced recent declines in asset value,” believing “that the market will increase going forward” following these declines.
The researchers found that participants’ reliance on the “gambler’s fallacy” is “amplified when they face urgent donation appeals.”
“Holders of cryptocurrency are quite familiar with the urgency-based trading, as they seek to avoid missing out on short-term gains that may expire suddenly due to the unpredictable nature of cryptocurrencies,” the paper reads in part.
The scholars argue that charitable organizations accepting cryptocurrency donations may benefit from timing appeals with the flow of the market in order to maximize donations.
“Accordingly, charitable organizations should consider integrating an urgency framing in their cryptocurrency donation appeals,” the research claims.
Combining research from scholars at Boston University, Indiana University, the University of Colorado at Boulder, and the University of New Mexico, the study is the first of its
