Gambler's Fallacy Flashcards

1
Q

Perceptions of randomness: attribution of mechanism

A
  • When there’s a non-switchy sequence, people are more likely to attribute it to a person (basketball player taking shots)
  • When there’s a very switchy sequence, people are more likely to attribute it to chance (coin toss)
  • At a statistically random sequence (0.5), are more likely to attribute it to the bball player again -> still feels non-switchy
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2
Q

Roulette Predictions study: basics

A
  • Guess RED or BLACK & rate your confidence
  • Participants randomly divided into 2 categories:
    • 15 forecasters (“the roulette spins follow a complex computer algorithm” -> skill involved)
    • 15 gamblers (“it’s a game of chance”)
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3
Q

Roulette Predictions study: Gambler’s fallacy

A

likelihood of choosing either colour decreases as a function of run length of that colour (for both forecasters and gamblers)

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4
Q

Roulette Predictions study: hot hand confidence

A

one’s predictions increase as a function of past success (feeling “in the zone”) -> more prominent in gambling condition than forecasting one

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5
Q

Hot Hand Fallacy

A
  • in basketball, if a player scores 3 consecutive shots, are they more likely to score on their next shot?
    • Players, fans and coaches all say YES, but when you analyze the data it shows NO
    • Outcomes of previous shots influenced predictions but not performance
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6
Q

Roulette predictions study: summary of sequence biases at play

A
  • After a run of one colour, subjects are less likely to predict it -> gambler’s fallacy
  • After a streak of wins, subjects are more confident in their next colour prediction -> hot hand effect
  • After a streak of losses, subjects are less confident in their next colour prediction -> cold hand effect
  • So people show more than 1 sequence bias, even within the same task
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7
Q

effect of gambler’s fallacy on loss streaks

A

loss streaks can cause loss chasing due to robust gambler’s fallacy -> feeling like you must be “due for a win”

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8
Q

reference points and wiping the slate

A
  • If people re-reference after each outcome, choices not influenced by past gains or losses, so no loss chasing
  • However, if you don’t re-reference between each decision, diminishing marginal utility creates loss chasing
  • Realizing losses by physical exchange of money abolishes loss-chasing tendencies
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