Predicting lotto numbers: A natural experiment on the gambler's fallacy and the hot hand fallacy
Suetens,Sigrid Galbo-Jorgensen,C.B. Tyran,J.R.
Suetens,Sigrid
Galbo-Jorgensen,C.B.
Tyran,J.R.
Abstract
We investigate the ’law of small numbers’ using a data set on lotto gambling that allows to measure players’ reactions to draws. While most players pick the same set of numbers week after week, we find that those who do change, react on average as predicted by the law of small numbers as formalized in recent behavioral theory. In particular, players tend to bet less on numbers that have been drawn in the preceding week, as suggested by the ’gambler’s fallacy’, and bet more on a number if it was frequently drawn in the recent past, consistent with the ’hot-hand fallacy’.
Description
Date
2016-06-01
Journal Title
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Volume Title
Publisher
Research Projects
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Keywords
behavioral economics, decision biases, gambler's fallacy, hot-hand fallacy, lotto gambling, D03 - Behavioral Microeconomics ; Underlying Principles, D81 - Criteria for Decision-Making under Risk and Uncertainty, D84 - Expectations ; Speculations
Citation
Suetens, S, Galbo-Jorgensen, C B & Tyran, J R 2016, 'Predicting lotto numbers : A natural experiment on the gambler's fallacy and the hot hand fallacy', Journal of the European Economic Association, vol. 14, no. 3, pp. 584-607. https://doi.org/10.1111/jeea.12147
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info:eu-repo/semantics/closedAccess