Gambler’s Fallacy

“Gambling: The sure way of getting nothing for something.”

-Wilson Mizner

 

TASK AT HAND: This week I’m thinking about the gambler’s fallacy. When you flip a coin, the outcome (assuming a fair coin) is independent of the previous result. The gambler’s fallacy is the mistaken belief that, what happens more frequently in one time period, will happen less frequently in another time period.

“The gambler’s fallacy is the mistaken belief that, what happens more frequently in one time period, will happen less frequently in another time period.”

For example, someone flips a coin and it lands on heads five times in a row. What do you expect the next result to be? It’s still a 50% chance of heads or tails because, in situations where what is being observed is truly random, the previous result has no effect on the next result. The fallacy to think that the next coin flip will reveal tails, because the last five were heads, occurs by the appeal of this fallacy to the human mind which surmises that the next result “should” be different than the previous ones.

“In situations where what is being observed is truly random, the previous result has no effect on the next result.”

Why are we talking about this on today’s Sunday Surgical Scrub? The reason is this fallacy arises in varied situations and needs to be differentiated from the principle that, the best indicator of future performance is past performance. The significant difference between this key principle and the gambler’s fallacy is that the latter applies to random events while the former is best applied to the complex personal and professional strategies we employ.

For example, let’s take the situation of a job application. Let us take someone who has been turned down for five straight positions and has a sixth interview scheduled. He or she can take the approach that, “I’m bound to get one of these jobs sooner or later since I’ve been rejected so many times”. This is the gambler’s fallacy at work. Don’t see this as a random event in the same way a roulette spin is a random event. Our choices involve a multitude of inputs that we must process and then synthesize a coherent strategy from. The preferred adaptive approach would be to ask for feedback at the five rejections and look for common themes. Why are you not getting these jobs? Are there more qualified applicants? Is there a problem with your skill set? Do you have a bad reference? If you don’t seek this crucial information out, it will be difficult to break through and change the result. Contrast this with someone who pays attention to detail and seeks out positions that best suit his or her skill set. They may only get two or three interviews but, the chance of successful conversion, will be higher.

“Our choices involve a multitude of inputs that we must process and then synthesize a coherent strategy from. They are not random events in the same way a roulette spin is a random event.”

“Casino gambling is colorful and dramatic and theatrical” (Steve Wynn). Leave gambling to the theatrics of the casino. Don’t gamble with the decisions we ponder and pontificate on. Avoid the gambler’s fallacy in random events and, when it comes to choices and crossroads, use the power of analysis to maximize your performance and achieve the objectives you seek. Don’t ever leave these to chance.

 

MEDICINE & MACULA: Many thanks for the interest and support for my new book, Decision Diagnosis: Seven Antidotes to Decision Procrastination. Since its release, it has held a top spot on Amazon in multiple categories and in multiple countries.

It is currently listed as:

#1 in Decision-Making & Problem Solving (USA)
#1 in Management & Leadership (USA)
#2 in Business & Money (USA)
#3 in Management & Leadership (UK)
#2 in Decision-Making & Problem Solving (Germany)
#1 in Self-Help & Success (Canada)
#1 in Decision-Making & Problem Solving (Canada)
#1 in Management & Leadership, Decision-Making & Problem Solving (Canada)
#1 in Decision-Making & Problem Solving (Australia)

My sincere thanks for the support!

The paperback will be released in the next few days and you find it here.

 

GRATIS: “In a bet, there is always a fool and a thief.” -Unknown
 

My best to you,

David Almeida

david@davidalmeidamd.com

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