Judgment and Decision Making (Apr 2010)
The gambler's fallacy in retrospect
Abstract
Oppenheimer and Monin (2009) recently found that subjectively rare events are taken to indicate a longer preceding sequence of unobserved trials than subjectively common events, an effect which they refer to as the retrospective gambler's fallacy. The current paper extends this idea to the situation where participants judge the likelihood of streak continuation. Participants were told about a streak produced by a random process (coin flips) or human performance (basketball shots), and either predicted the next outcome or inferred the immediately preceding outcome. For the coin scenarios, participants tended to expect streak termination -- the gambler's fallacy --- and this effect was the same for predictions and retrospective inferences. In the basketball scenarios, no overall bias was found in either prospective or retrospective judgments. The results support Oppenheimer and Monin's suggestion that reconstruction of the past entails the same heuristics as prediction of the future; they also support the idea that the nature of the data-generating process is a key determinant of whether people fall into the gambler's fallacy. It is suggested that the term retrospective gambler's fallacy be used to describe situations where a streak is taken to indicate that the preceding unobserved outcome was of the opposite type, and that the phenomenon discovered by Oppenheimer and Monin be referred to as retrospective representativeness, or a retrospective belief in the law of small numbers.
