gambler's fallacy

is a result of an erroneous conceptualization of the law of large numbers.

Gambler's fallacy: The tendency to think that future probabilities are altered by past events, when in reality they are unchanged. The fallacy arises from an erroneous conceptualization of the law of large numbers. For example, 'I've flipped heads with this coin five times consecutively, so the chance of tails coming out on the sixth flip is much greater than heads.'

is an over-reliance on representativeness.

The second source of confusion stems from the reliance on representativeness. Shefrin (2000)

is regression to the mean gone overboard.

gambler's fallacy is regression to the mean gone overboard. . . ' Shefrin (2000)

is the tendency to erroneously think that future probabilities are altered by past events.

Gambler's fallacy: The tendency to think that future probabilities are altered by past events, when in reality they are unchanged. The fallacy arises from an erroneous conceptualization of the law of large numbers. For example, 'I've flipped heads with this coin five times consecutively, so the chance of tails coming out on the sixth flip is much greater than heads.

is the tendency to expect reversals to occur more frequently than actually happens.

Gambler's fallacy stems from two sorts of confusion. First, people have very poor intuition about the behavior of random events. With gambler's fallacy, they expect reversals to occur more frequently than actually happens. Shefrin (2000)

is the tendency to inappropriately predict reversal.

Strategist are prone to committing gambler's fallacy, a phenomenon whereby people inappropriately predict reversal. Shefrin (2000)

gambler's fallacy, n.All

gambler's fallacy