Consulting Past Experience in Making Sequential Prediction

Abstract

The gambler’s fallacy and the hot hand belief refer to individual’s anticipation that future binary outcomes have the tendency to either balance out or fuel up the precedent even if outcomes are randomly distributed. The biases have been documented in psychological literature since 1960s but are still open to interpretation. Though of opposite characteristics, the biases are typically believed to result from people’s schemata for sequential events; however, little has been done exploring the mechanistic underpinning of such schemata. Recent studies suggesting role of memory in sequential prediction leads to our speculation that recalled experience of streak events may play a part in shaping the recency biases. We find that participants that report higher frequency of engagement in streak events have stronger hot hand belief toward continuing green traffic lights streak and streak shots of professional basketball players. Furthermore, participants with higher self-reported frequency of experiencing feeling of being on streak momentums seem to be more willingly expecting the momentum happen again, which leads to a stronger hot hand belief, but they tend not to project the feeling onto others.