In addition to his most famous discoveries, it appears to have correctly shown that people tend to overestimate the hot hand effect and spot random patterns where they don’t exist. Scientists argue that people misinterpret randomness and draw the wrong conclusions. [Sources: 0, 11]
The first of the biases is player error, which leads a person to assume that a long sequence of “head” or “tail” increases the likelihood of getting a “head” or “tail”, respectively. Their reaction to this belief – when winners place safer bets, assuming they will lose, and losers place long-term bets, believing that their luck is about to change – has the opposite effect of lengthening successive streaks. [Sources: 8, 10]
Maybe people who have winning streaks are better at betting than people who don’t heat up. The idea is that during a losing streak, a player’s luck can tip over and he starts winning. Likewise, in gambling, when we have a winning streak due to a hot hand mistake, we believe our success will continue. [Sources: 9, 10]
This means that it is a hot hand mistake to say that winning many times in a row will increase your chances of winning the next bet, and the player mistakenly saying that losing many times in a row will increase your chances of winning. Every bet. Besides, they were wrong. When the player thinks that the probability of winning consecutively is greater, a hot hand error occurs. The tendency of players to exchange lottery tickets for multiple tickets instead of cash is consistent with the hot hand phenomenon; because people who have won consistently in the past believe that they are more likely to win again. The belief in hot hands stems from the control of illusions in which people believe that they or others can control randomly defined events. [Sources: 8, 10]
Hot hand error is a psychological condition in which people feel that a person is “hot” or “cold” based on past work, when that performance does not affect future results. Hot hand is a cognitive social bias in which a person believes that past successful achievements can be used to predict success in future endeavors. Key Points A hot hand is an idea in which people believe that after a series of successes, a person or organization is more likely to have lasting success. The hot hand belief is shared by many players and investors alike, and psychologists believe it comes from the same source – the representative heuristic. [Sources: 6, 8]
While there is some truth in this that a person can be in good shape or their confidence is reinforced by initial success, the Hot Hand phenomenon goes beyond that of people making statistically inaccurate assumptions. The fact that a team or player is doing well in a short period of time does not contradict their overall average, but the hot hand error leads us to believe it is. Most likely, we will place bets reflecting a logical error and, as a result, lose money. This is why it is so easy for a trader to believe that his hand is hot and that he cannot lose dramatically after a series of winning trades. [Sources: 3, 9, 11]
Hot handed bias occurs when a trader believes that they have a winning streak, they have a hot hand, so they cannot lose. Belief in a hot hand is also prevalent in sports, especially basketball, where it is believed that a player’s performance over a period of time is significantly better, depending on his or her successful shooting streak. When something like this happens, most observers and players assume that the player in question has a “hot hand” – that for some reason he has entered a state that makes him shooting and shooting easier than they are. Usually (or even easier, in the case of a star born to score, like Thompson). When people see a streak like Craig Hodges scoring 19 out of 3 in a row or other outstanding performance, they usually attribute it to a hot hand. [Sources: 0, 2, 8, 11]
The idea that basketball players can end up with a warm hand – a series in which they magically appear to be shot after shot – resonates with sports reporters and audiences alike. This column examines whether the hot hand idea has any real foundation. In basketball, recent research has mainly focused on controlled conditions such as shooting experiments, NBA three-point matches or free throws, and researchers find evidence of a strong hand even under these controlled conditions (Arkes 2010, Miller & Sanjurjo 2018, Miller & Sanjurjo 2019) … Belief in a warm hand is simply an illusion that arises from the fact that we humans have a predisposition to see patterns in chance; we see stripes even though the survey data is essentially random. [Sources: 2, 5]
The GVT concluded that a warm hand is a “cognitive illusion”; the tendency of people to detect random patterns, to consider completely typical stripes as atypical, made them believe in an illusory warm hand. Importantly, the GVT found that the pros (players and coaches) were not only victims of error, but that their faith in the hot hand was steadily growing. The GVT has generated significant interest in the hot hand in various fields and sports, including baseball (Green and Zwiebel, 2018), horseshoe throwing (Smith, 2003), tennis (Klaassen, Magnus, 2001) and bowling (Dorsey-Palmateer and Smith , 2004). ). … Research by University College London psychology professor Nigel Harvey and graduate student Juemin Xu, published in the May 2014 issue of Cognition magazine, found that online betting site gamblers believed in common gambling error, “gambler’s mistake,” etc., led to that they experienced the opposite effect, the hot hand delusion (via Cardiff Garcia). [Sources: 2, 5, 10]
There is also a hot-hand trend in financial markets where traders try to delegate their investment decisions to professional fund managers with proven track records, believing they can consistently maintain high performance indicators. Just like a player will have a random streak when a coin is tossed, a basketball player will have a random streak when a ball is tossed. Basketball players and fans alike tend to believe that a player’s chances of hitting after hitting are higher than after a mistake on the previous hit. In this intuitive test, players’ goal percentage after winning streaks was not significantly higher than after missing. [Sources: 1, 2, 11]
The results showed that these shooters achieved 57.3% of their shots after a streak of three or more hits and 57.5% of their shots after a streak of three or more failures. Half of the shooters had fewer hit or miss streaks than expected (52%), and the other 48% had much more hit or miss streaks. Thus, it is clear that there is no consistent pattern between hitting, missing and the next shot. [Sources: 4]
The research was aimed at proving that people are wrong in believing that players have hot hands and are more likely to hit another successful shot after a series of hits. The study, which examined the intuitive concept of hot hand and shooting range belief, was based on mathematical psychology, decision-making behavior, heuristics, and cognitive psychology. [Sources: 8, 11]
— Slimane Zouggari
##### Sources #####
[0]: https://www.thecut.com/2016/08/how-researchers-discovered-the-basketball-hot-hand.html
[1]: https://www.sciencedirect.com/science/article/pii/0010028585900106
[2]: https://www.scientificamerican.com/article/momentum-isnt-magic-vindicating-the-hot-hand-with-the-mathematics-of-streaks/
[3]: http://changingminds.org/explanations/theories/hot_hand.htm
[4]: https://www.samford.edu/sports-analytics/fans/2017/The-Hot-Hand-Myth-or-Reality
[5]: https://voxeu.org/article/basketball-s-hot-hand-myth-or-reality
[6]: https://www.investopedia.com/terms/h/hot-hand.asp
[7]: https://link.springer.com/article/10.3758/BF03206327
[8]: https://corporatefinanceinstitute.com/resources/knowledge/trading-investing/hot-hand/
[9]: https://thedecisionlab.com/biases/hot-hand-fallacy/
[10]: https://www.businessinsider.com/the-gamblers-fallacy-and-the-hot-hand-2014-4
[11]: https://capital.com/hot-hand-fallacy-bias