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House-money and break-even effects
In one line: After wins people take more risk; after losses they chase a break-even.
Evidence
Thaler and Johnson (1990): after prior gains people take more risk ('playing with the house's money'). After prior losses, gambles that offer a chance to break even become attractive.
Thaler and Johnson (1990): after prior gains people take more risk ('playing with the house's money'). After prior losses, gambles that offer a chance to break even become attractive.
Money is money, whichever way it arrived. Sizing by a fixed rule (Position sizing) instead of by recent results is one way to stay consistent.
Related
Sources & studies
Last checked: 2026-11-04 · Educational, not financial advice.
Education only, not financial advice. No signals. Backtests are hypothetical: real trading can be worse. Past results don't predict future results.