The Hot Hand Fallacy
Originally posted on Manage By Walking Around:
In sports and in gambling there is a mistaken belief that a player who is performing better than normal will continue to play well, even if the odds suggest otherwise. This belief is especially strong in basketball. Players who have made several shots in a row are considered to have a “hot hand” and encouraged to continue to shoot – even to attempt very difficult baskets they normally cannot make.
A variety of scientific experiments have documented the fallacy of the hot hand in basketball. A player may make many shots in a row in the short term but his performance will eventually return to his long-term average. The law of statistics is not suspended.
Similarly, when gamblers are on winning streaks, they keep betting or even increase their wagers to take advantage of their good luck. Like in basketball, gamblers ignore statistics and mistakenly believe they are more likely to win a future bet because they have won previous ones.