The Gambler’s Fallacy

If you flip a coin and get heads three straight times, what do you think the fourth flip will be?  The odds are still 50-50 you will get heads again because each flip is independent (and the coin can’t remember how it landed in the past).  Yet that’s not what human nature wants to believe.

This is known as the “gambler’s fallacy” — we tend to make decisions based on the order in which we receive them.  For example, if you are an loan officer and you approve three straight loans, you may be slightly less inclined to approve the fourth simply based on the order in which it was received, even though it may be just as legitimate as the others.  This inclination can influence all types of occupations — judges, baseball umpires (as in the photo), test-takers, parents… you name it.

Is there a solution?  The best way to combat this bias is to realize it exists and avoid letting past decisions influence the future.  But, of course, that’s easier said than done.

There is an excellent Freakonomics podcast on the gambler’s fallacy, entitled How to Make a Bad Decision”,  at  The photogamblers-fallacy comes from that website.

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