What is the 'Gambler's Fallacy'? The Gambler's Fallacy, also | Investitsiya_uz|NYSE Amerika fond birjasi

What is the "Gambler's Fallacy"?

The Gambler's Fallacy, also known as the Monte Carlo Fallacy, occurs when an individual erroneously believes that a certain random event is less likely or more likely to happen based on the outcome of a previous event or series of events. This line of thinking is incorrect, since past events do not change the probability that certain events will occur in the future.

The main reason for this phenomenon is that people often focus on the sequence when making decisions and often do not consider probability theory and Random Walk Theory. Also, people's behavior is to believe that small events can produce surprising results, just as they play the lottery believing they will win $1 million from a $1 lottery ticket.

For example, we know that a coin has two sides, head and tail. This means that when a coin is tossed, there is a 50% probability that it will land on the tail side and 50% on the head side. So, if we toss a coin, there is a 50% probability that it will come up with a tail side or with a 50% probability that it will come up with a head, that is, one of the two is certain and the probabilities are equal. If a coin is tossed the first time and the tail side lands, then the second (third, fourth ... n-th) toss will have the same probability of both events. The gambler's fallacy here is to think that if the coin comes up numbers twice, then the next toss will most likely come up heads.