Hot-hand Fallacy (Why do we expect recent success to predict future success?)
The Hot-hand Fallacy, a brief explanation
What is the Hot-hand Fallacy?
The hot-hand fallacy is the tendency to believe that recent successes predict future successes.
Examples
If your favourite sports team is on a ‘winning streak’ and have won a series of recent games you will predict that they will win more games soon
In business investors tend to believe that if a professional manager has made successful investments in the past, whatever they invest in in the future will also be a success.
The literature
Bar-Eli, M., Avugos, S. & Raab, M. (2006). Twenty years of the “hot hand” research: review and critique. Psychology of Sport and Exercise, 7(6), 525-553. Doi: 10.1016/j.psychsport.2006.03.001
Croson, R. & Sundali, J. (2005). The gambler’s fallacy and the hot hand: empirical data from casinos. Journal of Risk and Uncertainty, 30, 195-209. Doi: 10.1007/s11166-005-1153-2
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