Case file
Gambler's Fallacy
- Filed under
- Not Enough Meaning
- Also recorded as
- Monte Carlo fallacy
The charge
Gambler's fallacy is expecting a random process to reverse soon because one outcome has happened repeatedly.
How it operates
People expect randomness to look locally balanced, so streaks feel like they must self-correct quickly.
Logged incidents
- Incident 01
A trader thinks a stock is due for an up day after several down days.
- Incident 02
A growth team expects conversion must bounce after a week of misses even though daily outcomes are noisy.
- Incident 03
An executive assumes a sequence of bad candidate interviews means the next one is more likely to be great.
What to watch for
Ask: Are these events actually independent, or am I assuming short streaks must balance out?
Recommended action
Do an independence check and teach the team how random sequences naturally contain streaks.
Known associates
- ConfabulationConfabulation is unintentionally filling gaps in memory or explanation with details that feel true but were…
- Clustering IllusionClustering illusion is seeing meaningful streaks or clumps in data that are actually compatible with…
- Insensitivity to Sample SizeInsensitivity to sample size is treating small samples as if they are just as reliable as large ones.
- Neglect of ProbabilityNeglect of probability is reacting to how vivid or scary an outcome is while giving too little weight to how…
- Anecdotal FallacyAnecdotal fallacy is letting one or two vivid stories outweigh broader and better-quality evidence.
- Illusion of ValidityIllusion of validity is feeling highly confident in a judgment because the evidence forms a neat story, even…
Source of record