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Carry on winning: The gamblers' fallacy creates hot hand effects in online gambling.

Xu, J; Harvey, N; (2014) Carry on winning: The gamblers' fallacy creates hot hand effects in online gambling. Cognition , 131 (2) 173 - 180. 10.1016/j.cognition.2014.01.002. Green open access

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Abstract

People suffering from the hot-hand fallacy unreasonably expect winning streaks to continue whereas those suffering from the gamblers' fallacy unreasonably expect losing streaks to reverse. We took 565,915 sports bets made by 776 online gamblers in 2010 and analyzed all winning and losing streaks up to a maximum length of six. People who won were more likely to win again (apparently because they chose safer odds than before) whereas those who lost were more likely to lose again (apparently because they chose riskier odds than before). However, selection of safer odds after winning and riskier ones after losing indicates that online sports gamblers expected their luck to reverse: they suffered from the gamblers' fallacy. By believing in the gamblers' fallacy, they created their own hot hands.

Type: Article
Title: Carry on winning: The gamblers' fallacy creates hot hand effects in online gambling.
Open access status: An open access version is available from UCL Discovery
DOI: 10.1016/j.cognition.2014.01.002
Publisher version: http://dx.doi.org/10.1016/j.cognition.2014.01.002
Additional information: © 2014 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/3.0/).
Keywords: Gamblers’ fallacy, Hot-hand fallacy, Sports betting
UCL classification: UCL
UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > School of Life and Medical Sciences
UCL > Provost and Vice Provost Offices > School of Life and Medical Sciences > Faculty of Brain Sciences
UCL > Provost and Vice Provost Offices > School of Life and Medical Sciences > Faculty of Brain Sciences > Div of Psychology and Lang Sciences
UCL > Provost and Vice Provost Offices > School of Life and Medical Sciences > Faculty of Brain Sciences > Div of Psychology and Lang Sciences > Experimental Psychology
URI: https://discovery.ucl.ac.uk/id/eprint/1422581
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