Cognitive distortions in addictive consumption: Evidence from gambling

Across a wide range of commercially available products, some individuals engage in harmful addictive consumption. A challenging task for managers and policymakers is to identify how to modify commercial practices to reduce those harms, while minimizing unintended impacts on consumers without issues. In this study, we propose that one area of intervention should be the reduction of practices that reinforce cognitive distortions (maladaptive and erroneous thoughts) about likely consumption outcomes. Our study makes two direct contributions to the management literature. First, we extend the two-system model of consumer behavior to describe potential impacts cognitive distortions and discuss how they can lead to irrational choices. Our framing of ethical issues distinguishes between practices that are intrinsic to the goods sold, without which the product or service could be not be reasonably offered, and practices that are extrinsic, purposely added in the value chain to reinforce erroneous thoughts. Second, using the case of gambling disorders, we empirically implicate cognitive distortions in the development of addictive consumption and argue, using our findings and related literature, that management decisions can reinforce cognitive biases that lead to addictive behavior. We demonstrate that cognitive distortions are often purposefully reinforced by commercial gambling practices, and, using an instrumental variable identification strategy with a sample of gamblers (n=185), we demonstrate that cognitive distortions are likely to impact a pathway that leads to loss chasing, overspending, and addiction.