The hot hand belief and the gambler’s fallacy in investment decisions under risk

Abstract

Hot hand belief, Gambler’s fallacy, Experimental economics, Decision making under risk, C91, D81, G10,

Am I My Peer's Keeper? Social Responsibility in Financial Decision Making

“…The feedback for the rst decision, however, alters the information set for the subsequent decision. This situation could trigger psychological anchoring eects such as gamblers fallacy or hot hand belief (see e.g., Huber et al, 2010). In Sutter (2009), each decision taken was observed by the whole group, so even if the decision maker took his rst turn, his decisions were inuenced by the observations of previous outcomes.…”

Causality Illusion and Overconfidence in Predicting (Quasi)Stochastic Financial Events

“…V nakupování zbytečných informací se nelišili muži a ženy, vliv neměla ani velikost získaných peněz a statistická gramotnost ovlivňovala chování participantů jen mírně. Podobných výsledků dosáhla i další laboratorní studie, která explicitně využila rámování experimentu jako simulaci investičních aktivit [Huber et al, 2010].…”

Would you Pay for Transparently Useless Advice? A Test of Boundaries of Beliefs in The Folly of Predictions

“…setting. In experiments ran by Huber, Kirchler, and Stockl (2010), participants were asked to decide between a risky and a risk-free investment. If they opt for the former, they were given an opportunity to either make the risky investment themselves or delegate the decision to an expert for some fees.…”

“…The second is that the hot hand fallacy normally arises in situations where human skills are a priori, albeit erroneously, perceived as part of the streak-generating process. To quote Huber et al (2010), ''The hot hand belief is usually attributed to human skilled performance, whereas the gambler's fallacy is often attributed to inanimate chance mechanism'' (p. 446).…”