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Author Topic: The Hot Hand Fallacy  (Read 3052 times)

Romn.Paras

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The Hot Hand Fallacy
« on: December 04, 2014, 01:58:26 AM »
 Hello my fellow Roulette enthusiasts. Today I want to discuss another fallacy that some of you may not have heard of. It is called The Hot Hand Fallacy. We have heard about the Gambler's Fallacy. The Hot Hand Fallacy is the sibling of the Gambler's Fallacy and is just as important to understand. Here is an explanation of The Hot Hand Fallacy so we know how to keep a clear mind and good judgment when we play roulette.

A gambler has had a streak of good luck.  Therefore, the gambler is "hot" and the good luck will continue at a probability greater than chance.

 A gambler has had a streak of bad luck.  Therefore, the gambler is "cold" and the bad luck will continue at a probability greater than chance.

This fallacy is committed every day in casinos around the world, whenever a gambler thinks he's "hot". When gamblers are on winning streaks, and keep betting or increasing their wagers to take advantage of their good luck, they commit this fallacy. Despite it's name, gamblers also commit this fallacy when they think that they're "cold", and stop betting or decrease their wagers because they're on a losing streak. This is still the "hot hand" fallacy, because the logical mistake is the same.

The fundamental error is the same as in the gambler's fallacy, that is, the failure to appreciate statistical independence. Just as a fair gambling device does not remember its own past, it also does not remember a gambler's past. So, a gambler's odds of winning a current bet are not affected by whether the gambler has won or lost previous ones. Roulette wheels and dice do not have memories.

Ironically, the gambler's and hot hand fallacies can lead to contrary expectations about what will happen next: Suppose that someone bets on a "lucky" number, and wins several times in a row. The gambler's fallacy predicts that the lucky number will be less likely than chance to come up on the next bet, but the hot hand fallacy predicts that the lucky number is more likely to come up. This means that both predictions cannot be true, despite the fact that many gamblers probably have committed both fallacies, even on the same day, though not at the same time. So, these two forms of argument cannot both be cogent, and in fact both are uncogent.

It should be noted that the so-called "hot hand" in basketball and other sports may be a different phenomenon than that discussed in this entry, though it is still controversial. Since basketball and other sports are games of skill, it's possible that psychological factors may lead players to hit or miss in streaks greater than would be accounted for by chance. This is not the case for most gambling games, such as roulette, which are games of chance rather than skill.

Although Hot Hands are a phenomenon prevalent in Poker, it is actually a fallacy that Texas Holdem is all luck. Skill will negate short term variance and trump the effects of luck in the long run, whether you are challenging faceless players for money or playing live in Las Vegas.
No one is safe from being a victim of this fallacy. Even players who play on mobile casinos are sure that if luck struck once and they won a game, they're more likely to win again in the next game, and vice versa. It seems that this fallacy transcends the medium one uses in order to play casino games. However, it can be avoided by being aware of it and changing one's thought process while gambling.

« Last Edit: December 04, 2014, 02:01:59 AM by Romn.Paras »


 

dobbelsteen

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Re: The Hot Hand Fallacy
« Reply #1 on: December 09, 2014, 10:52:37 AM »
I live in an apartment direct at the beach. I have a bright sight over the sea.
There is not one day the sea looks the same. The sea is seldom as flat as a mirror.

The roulette generates also waving patron . The winning and losing streaks  have also a waving patron.
 The experience statically player uses these crests and troughs. He knows, when he starts and ends betting.

One of my basic rules is, start your strategy after a losing streak.
Before I start my session I always study the past 50 spins.
 

Romn.Paras

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Re: The Hot Hand Fallacy
« Reply #2 on: December 09, 2014, 09:43:40 PM »
Dobbel,

I agree with what you say. I am a firm believer in that we should plan ahead of time when to play and when to walk away.  My golden rule when I play is that my goal is to win just 10% of my bankroll. That's it.  Most people laugh at this idea. They all expect to double their capital, and most of them hope to make 400-500%. But the bank in a good year only makes about 1% a week and about 50% for the year. That is still a huge gain.  To put in another perspective, if we play once a month, that is 10% a month multiplied by 12 months in a year is 120% return on your investment.  Most investments in the stock market at best are 25 to 30%.  This makes us dangerous players when we play this way. Because unlike the bank, we can get up and walk away whenever we want.

Dobbel,  you have good insight and the experience to back it up. I always enjoy reading your blog and ideas. 
 

BlueAngel

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Re: The Hot Hand Fallacy
« Reply #3 on: December 28, 2014, 10:15:20 AM »
I live in an apartment direct at the beach. I have a bright sight over the sea.
There is not one day the sea looks the same. The sea is seldom as flat as a mirror.

The roulette generates also waving patron . The winning and losing streaks  have also a waving patron.
 The experience statically player uses these crests and troughs. He knows, when he starts and ends betting.

One of my basic rules is, start your strategy after a losing streak.
Before I start my session I always study the past 50 spins.

I totally agree with you and do the same.
Where are you from?
 

BlueAngel

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Re: The Hot Hand Fallacy
« Reply #4 on: December 28, 2014, 10:18:11 AM »
Dobbel,

I agree with what you say. I am a firm believer in that we should plan ahead of time when to play and when to walk away.  My golden rule when I play is that my goal is to win just 10% of my bankroll. That's it.  Most people laugh at this idea. They all expect to double their capital, and most of them hope to make 400-500%. But the bank in a good year only makes about 1% a week and about 50% for the year. That is still a huge gain.  To put in another perspective, if we play once a month, that is 10% a month multiplied by 12 months in a year is 120% return on your investment.  Most investments in the stock market at best are 25 to 30%.  This makes us dangerous players when we play this way. Because unlike the bank, we can get up and walk away whenever we want.

Dobbel,  you have good insight and the experience to back it up. I always enjoy reading your blog and ideas.

I would say you are rather realistic than conservative and this is fundamental...
 

Romn.Paras

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Re: The Hot Hand Fallacy
« Reply #5 on: December 31, 2014, 12:51:45 AM »
Thank you Blue Angel.  I just want to share my insight and philosophy with my fellow players.  Welcome to the forum Blue Angel.