“The ‘gambler’s fallacy,'” also called the Monte Carlo Fallacy, “can affect everyone from athletes to loan officers, creating deceptive biases that lead you to anticipate patterns that don’t really exist,” according to David Robson for BBC Worklife.
Robson posited a scenario to find out if you fall for the gambler’s fallacy: “Imagine you are tossing a (fair) coin and you get the following sequence: Heads, Heads, Tails, Tails, Tails, Tails, Tails, Tails, Tails, Tails, Tails, Tails. What’s the chance you will now get a heads?”
“Many people believe the odds change so that the sequence must somehow even out, increasing the chance of a heads on the subsequent goes. Somehow, it just feels inevitable that a heads will come next. But basic probability theory tells us that the events are statistically independent, meaning the odds are exactly the same on each flip. The chance of a heads is still 50% even if you’ve had 500 or 5,000 tails all in a row.”
Among other tests, researchers “analyzed umpires’ decisions in Major League Baseball games. In this case, the umpires were about 1.5% less likely to call a pitch a strike if the previous pitch was also called a strike – a small but significant bias that could make all the difference in a game. Kelly Shue, one the co-authors of the study, says that she was initially surprised at the results. ‘Because these are professionals and they’re making decisions as part of their primary occupation,’ she said. But they were still vulnerable to the bias.”
See the source link to learn more about this fascinating topic and avoid being the next person led to financial ruin by this fallacy.
Source: https://www.bbc.com/worklife/article/20200217-the-simple-maths-error-that-can-lead-to-bankruptcy?utm_source=pocket&utm_medium=email&utm_campaign=pockethits
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