An emotional hedge is a psychological and financial strategy used to mitigate potential negative emotions by offsetting a personally significant outcome with a compensatory action.[1] The concept is most commonly applied in sports betting, where an individual places a wager against their favored team.[2] If the team wins, the emotional satisfaction compensates for the financial loss; if the team loses, the financial gain cushions the emotional disappointment.[3] [4]
Despite the fact that an emotional hedge guarantees the bettor one positive outcome, it is rarely observed. Optimism bias, in which the probability of a positive outcome is overestimated by an emotionally-driven bettor, plays a part in many people's decision not to make the bet.[5] In sports betting, many are also reluctant to make the bet because they feel that it is disloyal to their favored team.[6]