scholarly journals Decision-Making under the Gambler's Fallacy: Evidence from Asylum Judges, Loan Officers, and Baseball Umpires

2016 ◽  
Author(s):  
Daniel Chen ◽  
Tobias Moskowitz ◽  
Kelly Shue
Keyword(s):  
Decision Making ◽  
Gambler’S Fallacy ◽  
Gambler's Fallacy ◽  
Loan Officers

scholarly journals Decision Making Under the Gambler’s Fallacy: Evidence from Asylum Judges, Loan Officers, and Baseball Umpires *

2016 ◽  
Vol 131 (3) ◽  
pp. 1181-1242 ◽  
Author(s):  
Daniel L. Chen ◽  
Tobias J. Moskowitz ◽  
Kelly Shue
Keyword(s):  
Decision Making ◽  
Alternative Explanation ◽  
Decision Makers ◽  
Contrast Effects ◽  
High Stakes ◽  
Gambler’S Fallacy ◽  
Gambler's Fallacy ◽  
Loan Officers ◽  
Treat All ◽  
Rule Out

Abstract We find consistent evidence of negative autocorrelation in decision making that is unrelated to the merits of the cases considered in three separate high-stakes field settings: refugee asylum court decisions, loan application reviews, and Major League Baseball umpire pitch calls. The evidence is most consistent with the law of small numbers and the gambler’s fallacy—people underestimating the likelihood of sequential streaks occurring by chance—leading to negatively autocorrelated decisions that result in errors. The negative autocorrelation is stronger among more moderate and less experienced decision makers, following longer streaks of decisions in one direction, when the current and previous cases share similar characteristics or occur close in time, and when decision makers face weaker incentives for accuracy. Other explanations for negatively autocorrelated decisions such as quotas, learning, or preferences to treat all parties fairly are less consistent with the evidence, though we cannot completely rule out sequential contrast effects as an alternative explanation.

Behavioral factors affecting investment decision-making in bank stocks on the Ghana stock exchange

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Alexander Quaicoe ◽  
Paul Quaisie Eleke-Aboagye
Keyword(s):  
Decision Making ◽  
Stock Market ◽  
Stock Exchange ◽  
Investment Decisions ◽  
Mental Accounting ◽  
Content Type ◽  
Gambler’S Fallacy ◽  
Gambler's Fallacy ◽  
Ghana Stock Exchange ◽  
Regret Aversion

Purpose The finance literature is awash with papers bordering on the classical assumption that investors are rational in their decision-making, and hence, would always take decisions rationally given the right information, thus making the stock market efficient. This assumption has, however, been found to be at least inadequate given the fact that investors are complex psychological beings full of emotions. This paper aims to investigate the psychological factors that tend to influence the decisions of investors. Design/methodology/approach The study used a questionnaire to survey a total of 350 investors holding stocks of listed banks on the Ghana Stock Exchange (GSE). Findings The study found the existence of various behavioural biases among the investors surveyed. The most dominant factor or bias found to be influencing investment decisions of respondents was herding with nearly 62% weight. Again, biases such as regret aversion and gambler’s fallacy were also found to strongly influence the decisions of investors, along with mental accounting, overconfidence and anchoring. Practical implications The presence of these behavioural biases, therefore suggests that investors do not always take rational decisions, and hence, making the stock market efficient and that as psychological beings, their investment decisions are impacted strongly by their psychology. Originality/value The study used a questionnaire to survey a total of 350 investors holding stocks of listed banks on the GSE with a special focus on overconfidence, anchoring, herding, gambler’s fallacy, mental accounting and regret aversion as the variables of interest, the first of its kind in Ghana.

scholarly journals The gambler's fallacy fallacy (fallacy)

2016 ◽  
Author(s):  
Marko Kovic ◽  
Silje Kristiansen
Keyword(s):  
Decision Making ◽  
Irrational Belief ◽  
Standard Account ◽  
Gambler’S Fallacy ◽  
Simple Heuristic ◽  
Gambler's Fallacy ◽  
Independent And Identically Distributed

The gambler's fallacy is the irrational belief that prior outcomes in a series of events affect the probability of a future outcome, even though the events in question are independent and identically distributed. In this paper, we argue that in the standard account of the gambler's fallacy, the gambler's fallacy fallacy can arise: The irrational belief that all beliefs pertaining to the probabilities of sequences of outcomes constitute the gambler's fallacy, when, in fact, they do not. Specifically, the odds of the probabilities of some sequences of outcomes can be epistemically rational in a given decision-making situation. Not only are such odds of probabilities of sequences of outcomes not the gambler's fallacy, but they can be implemented as a simple heuristic for avoiding the gambler's fallacy in risk-related decision-making. However, we have to be careful not to fall prey to a variant of the gambler's fallacy, the gambler's fallacy fallacy (fallacy), in which we do not calculate odds for the probabilities of sequences that matter, but rather simply believe that the raw probability for the occurrence of a sequence of outcomes is the probability for the last outcome in that sequence.

scholarly journals The Gambler’s Fallacy Is Associated with Weak Affective Decision Making but Strong Cognitive Ability

PLoS ONE ◽  
2012 ◽  
Vol 7 (10) ◽  
pp. e47019 ◽  
Author(s):  
Gui Xue ◽  
Qinghua He ◽  
Xuemei Lei ◽  
Chunhui Chen ◽  
Yuyun Liu ◽  
...  
Keyword(s):  
Decision Making ◽  
Cognitive Ability ◽  
Gambler’S Fallacy ◽  
Gambler's Fallacy

scholarly journals Penerapan Decision tree dalam pengambilan keputusan untuk pemain Texas Holdem Poker

2021 ◽  
Vol 12 (2) ◽  
pp. 167
Author(s):  
Prastika Indriyanti ◽  
Muhamad Fazalika Hismawan ◽  
Mujiono Mujiono
Keyword(s):  
Decision Making ◽  
Decision Tree ◽  
Search Tree ◽  
Poker Game ◽  
Probability Of Occurrence ◽  
Gambler’S Fallacy ◽  
Winning Percentage ◽  
Gambler's Fallacy ◽  
Additional Income

Abstract Texas holdem poker is a popular poker game. This game is played by millions of people every day, both to find additional income or just for fun. But in fact not everyone who plays poker with these goals gets according to what they have planned. Some people actually experience losses after playing. They unconsciously develop the logic of gambler's fallacy that causes them to play poker without using strategy.  This research made a system that can prove the defect of gambler's fallacy and made a tool for playing poker. The processed dataset is a dataset containing information of cards used in poker and their probability of occurrence. The method used in this research are iterative deepening search tree and decision tree. The main results of this research is a tool that can provide insight as a basis for decision making. However, this tool has not been able to prove its capabilities in helping to increase the winning percentage, so that further study is needed. In addition, this study also shows that playing with gambler's fallacy logic only gives 48.13% wins of 6,000 trials. These results proved that using gambler's fallacy logic in playing poker is a mistake.Keywords – Tree, Poker, Probability, Gambler’s Fallacy Abstrak Texas holdem poker merupakan permainan poker yang populer. Permainan ini dimainkan oleh jutaan orang setiap harinya, baik untuk mencari penghasilan tambahan ataupun hanya untuk bersenang-senang. Namun pada kenyataanya tidak semua orang yang bermain poker dengan tujuan tersebut mendapatkan sesuai dengan apa yang mereka rencanakan. Sebagian orang justru mengalami kerugian pasca bermain. Mereka tanpa sadar mengembangkan logika berpikir gambler’s fallacy yang mengakibatkan bermain tanpa strategi. Makalah ini menyajikan hasil studi penerapan pohon keputusan dan pohon pencarian untuk membuktikan kecacatan gambler’s fallacy dan membantu dalam bermain poker. Dataset yang diolah adalah dataset yang berisi informasi kartu-kartu yang dipakai dalam permainan serta probabilitas kemunculannya. Metode yang digunakan pada penelitian ini adalah metode pencarian pada struktur tree dan metode pohon keputusan. Hasil utama dari penelitian ini adalah alat bantu yang mampu memberikan insight sebagai dasar pengambilan keputusan.  Namun, alat bantu ini belum bisa dibuktikan kapabilitasnya dalam membantu menaikkan persentase kemenangan sehingga diperlukan studi lanjutan. Selain itu, penelitian ini juga menunjukkan bahwa bermain dengan logika gambler’s fallacy hanya memberikan 48.13% kemenangan dari 6000 percobaan. Hasil tersebut membuktikan bahwa menggunakan logika gambler’s fallacy dalam bermain poker merupakan suatu kesalahan.Kata kunci – Tree, Poker, Probabilitas, Gambler’s Fallacy 

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