I think the behavior we are seeing here may be more a case of loss aversion rather than anything else.

Assuming that red cards must come at some point (true if we are flipping over a limited set of cards with a blue-red ratio of 7 to 3; not sure if that is the setup), the subjects adopt a strategy that gives them the highest likelihood of avoiding failure completely. Predicting blue cards every time requires accepting a certain degree failure right from the outset and is thus unpalatable to the human mind which is loss-averse.

Even if the experiment is designed so that red cards are not guaranteed to come at some point (if, for example, you shuffle after every flip), the subjects may fall prey to gambler's fallacy, which, when combined with their loss-aversion, leads them to adopt the 70-30 strategy.