“A person who has not made peace with his losses is likely to accept gambles that would be unacceptable to him otherwise.” –Daniel Kahneman and Amos Tversky
We tend to bet more aggressively when the odds aren't in our favor. The right response, however, is to change direction, as Tim Harford writes in Adapt: Why Success Always Starts with Failure (our notes).
While poker can be analyzed rationally, with big egos and big money at stake it can also be a very emotional game. Poker players explained to me that there’s a particular moment at which players are extremely vulnerable to an emotional surge. It’s not when they’ve won a huge pot or when they’ve drawn a fantastic hand. It’s when they’ve just lost a lot of money through bad luck (a “bad beat’”) or bad strategy. The loss can nudge a player into going “on tilt” — making overly aggressive bets in an effort to win back what he wrongly feels is still his money. The brain refuses to register that the money has gone. Acknowledging the loss and recalculating one’s strategy would be the right thing to do, but that is too painful. Instead, the player makes crazy bets to rectify what he unconsciously believes is a temporary situation.