Abstract
Through two experiments we investigated, in a laboratory setting, whether a series of identical outcomes in a supposed random game would induce the gambler’s fallacy or the hot-hand fallacy. By using two indices of fallacy, the choice of a card on which to bet and the probability estimate of the occurrence of a given outcome, we tested explicitly the widely accepted hypothesis that the two fallacies were based on erroneous probability estimates. Moreover, we investigated whether fallacies increase the proneness to bet. Our results support the occurrence of the gambler’s fallacy rather than the hot-hand fallacy but suggest that choice and probability estimates are two reciprocally independent processes. Finally, probability estimates predict the amount bet.
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Notes
- 1.
As specified in the Materials and Procedure Section of the Experiment 1, high cards were the cards with numbers from 6 to 10 and low cards were those with numbers from 1 to 5. Note that in the deck of cards there were four types of cards, each of them having a number from 1 to 10.
- 2.
At the request of a reviewer, we specified the following: Since the dependent variable was dichotomous (high versus low card), it was recoded as a single dummy variable: 1 = high card; 0 = low card. Then, the one-way ANOVA was performed on the proportion of high cards chosen by the participants (note that the proportion of low cards can be obtained through subtraction).
- 3.
Note that no significant effect emerged even from the analyses performed by treating the probability estimate as a continuous variable. The linear regression carried out to test the effect of experimental conditions (coded as two dummy variables) on probability estimate showed no relationship between the variables. Even the point-biserial correlation coefficient did not show any significant relationship between the choice of the card (coded as dummy variable) and the probability of its drawing.
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Matarazzo, O., Carpentieri, M., Greco, C., Pizzini, B. (2018). Are the Gambler’s Fallacy or the Hot-Hand Fallacy due to an Erroneous Probability Estimate?. In: Esposito, A., Faudez-Zanuy, M., Morabito, F., Pasero, E. (eds) Multidisciplinary Approaches to Neural Computing. Smart Innovation, Systems and Technologies, vol 69. Springer, Cham. https://doi.org/10.1007/978-3-319-56904-8_34
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