IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

Biases in casino betting: The hot hand and the gambler's fallacy

Author Info

Listed author(s):
  • James Sundali
  • Rachel Croson

Abstract

We examine two departures of individual perceptions of randomness from probability theory: the hot hand and the gambler's fallacy, and their respective opposites. This paper's first contribution is to use data from the field (individuals playing roulette in a casino) to demonstrate the existence and impact of these biases that have been previously documented in the lab. Decisions in the field are consistent with biased beliefs, although we observe significant individual heterogeneity in the population. A second contribution is to separately identify these biases within a given individual, then to examine their within-person correlation. We find a positive and significant correlation across individuals between hot hand and gambler's fallacy biases, suggesting a common (root) cause of the two related errors. We speculate as to the source of this correlation (locus of control), and suggest future research which could test this speculation.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://journal.sjdm.org/jdm06001.pdf
Download Restriction: no
File URL: http://journal.sjdm.org/06001/jdm06001.htm
Download Restriction: no

Article provided by Society for Judgment and Decision Making in its journal Judgment and Decision Making.

Volume (Year): 1 (2006)
Issue (Month): (July)
Pages: 1-12

as
in new window

Handle: RePEc:jdm:journl:v:1:y:2006:i::p:1-12
Contact details of provider:

Keywords: judgment and decision making; hot hand; gambler's fallacy; casino betting; field data; roulette;

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as
in new window


  1. Rachel Croson & James Sundali, 2005. "The Gambler’s Fallacy and the Hot Hand: Empirical Data from Casinos," Journal of Risk and Uncertainty, Springer, vol. 30(3), pages 195-209, May.
  2. Richard H. Thaler & Eric J. Johnson, 1990. "Gambling with the House Money and Trying to Break Even: The Effects of Prior Outcomes on Risky Choice," Management Science, INFORMS, vol. 36(6), pages 643-660, June.
  3. Baron, Jonathan & Ritov, Ilana, 2004. "Omission bias, individual differences, and normality," Organizational Behavior and Human Decision Processes, Elsevier, vol. 94(2), pages 74-85, July.
  4. Ann-Renée Blais & Elke U. Weber, 2006. "A Domain-Specific Risk-Taking (DOSPERT)Scale for Adult Populations," CIRANO Working Papers 2006s-24, CIRANO.
  5. Shane Frederick, 2005. "Cognitive Reflection and Decision Making," Journal of Economic Perspectives, American Economic Association, vol. 19(4), pages 25-42, Fall.
  6. Samuelson, William & Zeckhauser, Richard, 1988. "Status Quo Bias in Decision Making," Journal of Risk and Uncertainty, Springer, vol. 1(1), pages 7-59, March.
  7. Ann-Renée Blais & Elke U. Weber, 2006. "A Domain-Specific Risk-Taking (DOSPERT) scale for adult populations," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 1, pages 33-47, July.
  8. Weber, Elke U. & Anderson, Carolyn J. & Birnbaum, Michael H., 1992. "A theory of perceived risk and attractiveness," Organizational Behavior and Human Decision Processes, Elsevier, vol. 52(3), pages 492-523, August.
Full references (including those not matched with items on IDEAS)

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

as
in new window


Cited by:

  1. Maya Bar-Hillel, 2015. "Position Effects in Choice from Simultaneous Displays: A Conundrum Solved," Discussion Paper Series dp678, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
  2. Karin Tochkov, 2009. "The effects of anticipated regret on risk preferences of social and problem gamblers," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 4(3), pages 227-234, April.
  3. Giancarlo Salirrosas Mart\'inez, 2016. "Biased Roulette Wheel: A Quantitative Trading Strategy Approach," Papers 1609.09601, arXiv.org.
  4. Judith Covey & Qiyuan Zhang, 2014. "The effect of dynamic proximity cues on counterfactual plausibility," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 9(6), pages 586-592, November.
  5. Bruce I. Carlin & David T. Robinson, 2009. "Fear and loathing in Las Vegas: Evidence from blackjack tables," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 4(5), pages 385-396, August.
  6. Rachel Croson & James Sundali, 2005. "The Gambler’s Fallacy and the Hot Hand: Empirical Data from Casinos," Journal of Risk and Uncertainty, Springer, vol. 30(3), pages 195-209, May.
  7. Greg Barron & Eldad Yechiam, 2009. "The coexistence of overestimation and underweighting of rare events and the contingent recency effect," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 4(6), pages 447-460, October.
  8. Jürgen Huber & Michael Kirchler & Thomas Stöckl, 2010. "The hot hand belief and the gambler’s fallacy in investment decisions under risk," Theory and Decision, Springer, vol. 68(4), pages 445-462, April.
  9. Livingston, Jeffrey A., 2012. "The hot hand and the cold hand in professional golf," Journal of Economic Behavior & Organization, Elsevier, vol. 81(1), pages 172-184.
  10. Maya Bar-Hillel, 2011. "Location, Location, Location: Position Effects in Choice Among Simultaneously Presented Options," Discussion Paper Series dp580, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
  11. Y. Ma & Ye Zhang, 2014. "Resolution of the Happiness–Income Paradox," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 119(2), pages 705-721, November.
  12. Shahar Ayal & Guy Hochman & Dan Zakay, 2011. "Two sides of the same coin: Information processing style and reverse biases," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 6(4), pages 295-306, June.
  13. Suetens, Sigrid & Tyran, Jean-Robert, 2012. "The gambler's fallacy and gender," Journal of Economic Behavior & Organization, Elsevier, vol. 83(1), pages 118-124.
  14. Nilsson, Håkan & Andersson, Patric, 2010. "Making the seemingly impossible appear possible: Effects of conjunction fallacies in evaluations of bets on football games," Journal of Economic Psychology, Elsevier, vol. 31(2), pages 172-180, April.
  15. Joshua B. Miller & Adam Sanjurjo, 2014. "A Cold Shower for the Hot Hand Fallacy," Working Papers 518, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  16. Tong V. Wang & Rogier J. D. Potter van Loon & Martijn J. van den Assem & Dennie van Dolder, 2016. "Number preferences in lotteries," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 11(3), pages 243-259, May.
  17. Joshua B. Miller & Adam Sanjurjo, 2015. "Is it a Fallacy to Believe in the Hot Hand in the NBA Three-Point Contest?," Working Papers 548, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  18. Yanlong Sun & Hongbin Wang, 2010. "Gambler's fallacy, hot hand belief, and the time of patterns," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 5(2), pages 124-132, April.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Access and download statistics

When requesting a correction, please mention this item's handle: RePEc:jdm:journl:v:1:y:2006:i::p:1-12. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jonathan Baron)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.