Surprised by the Gambler's and Hot Hand Fallacies? A Truth in the Law of Small Numbers

@article{Miller2016SurprisedBT,
  title={Surprised by the Gambler's and Hot Hand Fallacies? A Truth in the Law of Small Numbers},
  author={Joshua B. Miller and A. Sanjurjo},
  journal={Behavioral & Experimental Finance eJournal},
  year={2016}
}
  • Joshua B. Miller, A. Sanjurjo
  • Published 2016
  • Psychology
  • Behavioral & Experimental Finance eJournal
We prove that a subtle but substantial bias exists in a standard measure of the conditional dependence of present outcomes on streaks of past outcomes in sequential data. The magnitude of this novel form of selection bias generally decreases as the sequence gets longer, but increases in streak length, and remains substantial for a range of sequence lengths often used in empirical work. The bias has important implications for the literature that investigates incorrect beliefs in sequential… Expand
54 Citations
March Madness? Underreaction to Hot and Cold Hands in NCAA Basketball
Randomness in binary sequences: Conceptualizing and connecting two recent developments
A Bridge from Monty Hall to the Hot Hand: Restricted Choice, Selection Bias, and Empirical Practice
...
1
2
3
4
5
...

References

SHOWING 1-10 OF 130 REFERENCES
The Gambler's and Hot-Hand Fallacies: Theory and Applications
Gambler's fallacy, hot hand belief, and the time of patterns
The hot hand fallacy and the gambler’s fallacy: Two faces of subjective randomness?
Streaks in Earnings Surprises and the Cross-Section of Stock Returns
The Gambler’s Fallacy and the Hot Hand: Empirical Data from Casinos
Is It a Fallacy to Believe in the Hot Hand in the NBA Three-Point Contest?
A Cold Shower for the Hot Hand Fallacy
...
1
2
3
4
5
...