The Gambler Fallacy and Its Importance
The gambler’s fallacy is among the most discussed gambling terms. Quite a few books have been written about it and lots more will undoubtedly be in the future. Other names for it include the fallacy of the maturity of chances, the negative recency effect and the Monte Carlo fallacy, which all sounds highfalutin.
So, what exactly is this gambler illusion and why is it important to gamblers everywhere? Read on for answers.
The Truism of Gambler Fallacy
The definition of a fallacy is the act of assuming that some random events will determine what happens during a future event. Dek Terrel in a 1994 article for the Journal of Risk and Uncertainty more precisely defined the gambler fallacy as the belief that the odds of an event occurring decreasing over time. In actual practice though, random events do not affect and cannot determine the occurrence of future random events.
Some prime examples are as follows:
Let’s say that during Roulette gameplay, the last quartet of spins has resulted in the ball landing on red. Some players might give in to the gambler fallacy and reason that since the ball had previously landed on red, it should now land on black. As a consequence of this form of reasoning, such players now proceed to bet as much as they can manage on black. In actuality though, the Roulette wheel does not have a memory and all spins on the wheel are truly random, with the results of the previous spins having nothing at all to do with the results of any and all future spins.
Mortgage Market Roulette
In most land-based casinos, above the Roulette tables are positioned screens that show off the results of the last 20 spins. While this screen is ostensibly there to help players know the hot numbers to bet on, that is not the case. Worth repeating is that Roulette is one of the truest games of chance, with spin after spin having no relation to each other and player skill playing a nearly insignificant part in the gameplay results. Most players, however, give in to the gambler fallacy and refuse to believe this. They look up to the screen, see that red has come up the last 9 times, shake their heads at this news, “just know” that the ball will on the next spin land on black and wager accordingly. Since the Roulette wheel has absolutely no memory, there is, of course, a high probability that the bet will be lost. In case it is won, the gambler fallacy is reinforced in their minds and they depend on it to make their next wager and as a result, will sooner or later lose the entirety of their bankroll.
Take the case of parents who are happy with their family size, but desperately want a daughter to complement their 4 sons. The parents then fall prey to the gambler’s fallacy by assuming that since they already have a quartet of male offspring, they are well overdue for a daughter. This is a wrong assumption. The sex of their following child is casually unrelated to every preceding random event or even a series of random events. As such, the chances of their having a daughter is the same as it has always been, which is 50-50.
Hot Hands and Streaks in Baseball
In a game like baseball, a player who has not hit recently is regarded as being due for one sooner rather than later. Then there is the hot hand, which is the notion that a hot player can only rack up hit after hit. Believers in the gambler fallacy usually imagine that the hot streak will end quite soon, while those who believe in the notion of the hot hand imagine that hot streaks breed even more hot streaks.
The importance of the gambler’s fallacy
Understanding the gambler fallacy is important for players everywhere. Once this has been done, gamblers will cease applying logic to random events and stop betting accordingly. With the gambler fallacy mastered, gambling can become more fun and profitable, while understanding and insight about life, in general, are gained.
Blog Name: The Gambler Fallacy and Its Importance
Posted On: 30/08/2019
Author: Robert Bowron