Gamblers fallacy

Another mistaken notion connected with the law of large numbers is the idea that an event is more or less likely to occur because it has or has not happened recently. The idea that the odds of an event with a fixed probability increase or decrease depending on recent occurrences of the event is called the gambler’s fallacy. For example, if Kerrich landed, say, 44 heads in the first 100 tosses, coin would not develop a bias toward tails in order to catch up! That’s what is at the root of such ideas as “her luck has run out” and “He is due.” That does not happen.

For what it’s worth, a good streak doesn’t jinx you, and a bad one, unfortunately, does not mean better luck is in store. Still, the gambler’s fallacy affects more people than you might think, if not on a conscious level then on an unconscious one. People expect good luck to follow bad luck, or they worry that bad will follow good.
Now, we know that a modern slot machine is computerized, its payoffs driven by a random-number generator, which by both law and regulation must truly generate, as advertised, random numbers, making each pull of the handle completely independent of the history of previous pulls. And yet… Well, let’s just say the gambler’s fallacy is a powerful illusion.

Full Disclaimer: I am not a financial planner. The views expressed in this post are all mine and they may or may not suit your needs. Please do you own due diligence. I do not make money on any of the products suggested in this post. 


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