Many of you have probably heard of the Gambler’s Fallacy. This is where a gambler believes past independent events can affect a future outcome. If you want to read more, we discussed this fallacy in depth in our series on the hidden probabilities of Roulette. The Gambler’s fallacy has a converse however, the Hot Hand fallacy, and it is what we are going to analyze this week.
The term a “hot hand” was initially used in basketball to describe a basketball player who had been very successful in scoring over a short period. The notion is “If you have been winning, you are more likely to win again.” Like the Gambler’s fallacy, past independent events are thought to influence future outcomes. However, this fallacy can be sneaky. Suppose you are betting on a game of chance or sports outcomes and have been winning. Do you believe you are more likely to win again the next time you bet? The mentality is pervasive. When you go the casino with a bunch of friends and start winning a few bets in a row, it can be hard to rationally think about the hot hand fallacy!
We here at SaberSmart are huge fans of build-your-own food restaurants like Chipotle, Moe’s, or Subway. The options appear endless, but they must come to an end somewhere. Not only does this give us a chance to introduce the fascinating topics of combinations and permutations, but it also allows us to update a Business Insider article from 2013 that went pretty viral as well! Back in their 2005 Annual Report, Chipotle’s CEO, Steve Ells, made the following claim: