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The hot hand fallacy re-examined: New evidence from the English Premier League

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  • S Parsons
  • N Rohde

Abstract

Previous studies have illustrated human misperceptions of randomness and resultant suboptimal decision-making with reference to the 'hot hand' or momentum effect in sport, the notion of serial dependency between outcomes. However, issues of omitted variables bias have plagued many due to a reliance on nonparametric techniques or basic regression models. This article examines across-game and within-game momentum in the English Premier League (EPL) football competition using fixed effects regressions to control for time-invariant heterogeneity in conjunction with traditional nonparametric techniques. Although the results show evidence of performance reversal following winning streaks, no such evidence is found for streaks of draws or losses or in goal-scoring performance within games. This suggests that momentum is better suited as a post hoc label of performance than a robust causal phenomenon.
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Suggested Citation

  • S Parsons & N Rohde, 2013. "The hot hand fallacy re-examined: New evidence from the English Premier League," Discussion Papers in Economics economics:201403, Griffith University, Department of Accounting, Finance and Economics.
    • Handle: RePEc:gri:epaper:economics:201403
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    File URL: https://research-repository.griffith.edu.au/bitstream/handle/10072/390322/2014-03-hot-hand-fallacy-re-examined-new-evidence-from-the-english-premier-league.pdf
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    Cited by:

    1. Meier, Philippe & Flepp, Raphael & Ruedisser, Maximilian & Franck, Egon, 2020. "Separating psychological momentum from strategic momentum: Evidence from men’s professional tennis," Journal of Economic Psychology, Elsevier, vol. 78(C).
    2. Marius Ötting & Christian Deutscher & Carl Singleton & Luca De Angelis, 2023. "Gambling on Momentum in Contests," Economics Discussion Papers em-dp2023-08, Department of Economics, University of Reading.
    3. Robert Wrathall & Rod Falvey & Gulasekaran Rajaguru, 2020. "Do (Australian) jockeys have hot hands?," Australian Journal of Management, Australian School of Business, vol. 45(2), pages 223-239, May.
    4. Helmut Dietl & Carlos Gomez-Gonzalez & Cornel Nesseler, 2017. "Are women or men better team managers? Evidence from professional team sports," Working Papers 364, University of Zurich, Department of Business Administration (IBW).
    5. Pastoriza, David & Alegre, Inés & Canela, Miguel A., 2021. "Conditioning the effect of prize on tournament self-selection," Journal of Economic Psychology, Elsevier, vol. 86(C).
    6. Morgulev, Elia, 2023. "Streakiness is not a theory: On “momentums” (hot hands) and their underlying mechanisms," Journal of Economic Psychology, Elsevier, vol. 96(C).
    7. Carlos Gomez-Gonzalez & Helmut Dietl & Cornel Nesseler, 2019. "Does performance justify the underrepresentation of women coaches? Evidence from professional women’s soccer," Sport Management Review, Taylor & Francis Journals, vol. 22(5), pages 640-651, December.
    8. Philippe Meier & Maximilian Rüdisser & Raphael Flepp & Egon Franck, 2019. "Investigating the conditions for psychological momentum in the field: Evidence from men’s professional tennis," Working Papers 383, University of Zurich, Department of Business Administration (IBW).
    9. Steven Salaga & Katie M Brown, 2018. "Momentum and betting market perceptions of momentum in college football," Applied Economics Letters, Taylor & Francis Journals, vol. 25(19), pages 1383-1388, November.
    10. Vojtech Kotrba, 2023. "Testing “hot hand” hypothesis at the individual athletes' level in soccer," Economics Bulletin, AccessEcon, vol. 43(3), pages 1356-1365.

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    Keywords

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    JEL classification:

    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles

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