Hot Hand Fallacy:The Reason You Lost Your Bet

Have you ever heard of the hot hand fallacy? If you are a fan of sports betting, then you must know the hot hand fallacy, which is probably why your bets are lost. This article will take you to understand the hot hand fallacy, and give examples of various hot hand fallacy, come read it with me!

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What is the Hot Hand Fallacy?

1.Definitions

The hot hand fallacy is when people believe that positive outcomes will continue to flourish when a series of consecutive positive outcomes occurs. For example, it is often assumed that if a company or its stock has performed well in the past, the same trend will continue in the future.

2.Source

The hot hand fallacy originated in 1985, when well-known behavioral scientists Thomas Gilovich, Robert Vallone and Amos Tversky published their “basketball hot hand” study. They found that when a basketball player hits a streak, he’s a ” hot hand ” , and he believes that his good performance will continue, and then he will continue to make more shots.

This theory sounds reasonable, but there is absolutely no scientific basis for a ” hot hand ” to consistently make more shots, it’s just an unreasonable belief, experts believe that people misunderstand the randomness of winning streaks and do it wrong explanations and associations, because each outcome occurs independently, and a single victory does not predict or guarantee the next victory.

3.The Cold Hand Fallacy

The opposite concept to the hot-hand fallacy is the cold-hand fallacy, which refers to a series of positive outcomes and the continuation of positive outcomes, while the cold-hand fallacy refers to a series of failed outcomes that continue to occur. Like the hot hand fallacy, this is a misunderstanding because one failure doesn’t explain the next failure or victory.

Examples of the Hot Hand Fallacy

1.Coin toss

When flipping a coin, the chance of flipping heads and tails is actually 50%, but after five heads in a row, people believe that heads will be flipped next, so for people, heads or tails The probability of tails increases after a series of events , but in fact, no matter which outcome is thrown, the probability of occurrence is 50%.

2.Stake Games

In the roulette game, the ball lands on the number you choose 3 times in a row, you start to think that you are a very lucky person, your luck is on your head, so you believe that the ball will be lucky in the next round of the roulette The lands continue to fall to the numbers you choose, so you will keep betting on and on. But in fact the number of squares where the ball falls is not affected by the previous result.

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3.Shooting

As we said before, when a basketball player makes several shots in a row, he thinks he feels right, he is “on fire”, and his good performance will continue to go down in the future, he will be able to provide Teams win more points, and that’s the hot hand fallacy.

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The Role of the Hot Hand Fallacy

1.Effect on investment and gambling

Investing and gambling are inherently highly uncertain activities, and this uncertainty does lead to a lot of speculation and prejudice. When winning or losing, as long as there is a theory that can explain the results, people will be easily persuaded to follow this theory to make decisions. In fact, such behavior is very irrational, but even professional investment experts or game players can be affected by the hot hand fallacy.

2.Examples of the hot hand fallacy in investing

Many investors are affected by the hot hand effect. They will buy stocks when the stock of a company continues to rise, because they believe that the company is ” hot hand ” and the stock will continue to rise in the future. Buying stocks early can help make more money. But no one can tell the trend of the stock, it may stop rising the next day.

3.Examples of the hot hand fallacy in gambling

The first time someone bets $5 and gets $10 for winning, and after that happens a few times in a row, he considers himself very lucky and wins every time because then he starts increasing the amount bet, Go from $5 to $20 and end up with a direct bet of $ 50 . However, his victory may just be due to luck, and he may start to lose after increasing his bet, which will cause him a huge loss.

The Hot Hand Fallacy and The Gambler’s Fallacy?

1.The hot hand fallacy

The hot hand fallacy means that when a string of positive outcomes, or victories, occurs, people believe that they are in a very lucky or very active state, and therefore believe that the following positive outcomes will continue to occur.

2.The Gambler’s Fallacy

Gambler ‘s fallacy is different from the hot hand fallacy, which refers to the fact that when a chain of positive or negative outcomes occurs, the opposite outcome follows. For example, after a game player loses 10 times in a row, he believes that the ” next ” result will be different, and he believes that the next result must be reversed, so he will continue to play the ” next ” game. Similarly, there is no evidence that the results of the next round are affected by the previous ones, which is also a wrong intuition.

3.The difference between the two

These two phenomena are completely opposite. The same is true after a series of n equal outcomes , in the hot hand fallacy one believes that the same outcome will occur again, and in the gambler’s fallacy one believes the opposite outcome will occur.

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Hot Hand Fallacy FAQ

1.Is the hot hand fallacy true?

It’s true, there is no evidence that ” hot hands ” will happen, all of which are unreasonable assumptions and beliefs of people. The hot hand fallacy will cause many gamblers to lose a lot, and one should try to avoid the hot hand fallacy.

2.Is there evidence for the hot hand effect?

There is no evidence, which is why the hot hand fallacy theory emerges. The hot hand effect is just a person’s intuition and belief. It is a personal feeling that people think they are in a very lucky or very current state, and has no correlation with the next result.

3.How to prevent the hot hand effect?

It’s very simple, you just need to realize that you will never be in a ” hot hand ” state, even if you have done a series of successes many times in a row, but you need to know that each success is independent and does not affect each other . No matter how successful you have been in the past , do n’t make decisions lightly, come to logical conclusions about your trading choices.

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