What do you need to know about Gambler’s Fallacy
In the world of gambling there is a term known as gambler’s fallacy. This is a situation that arises where a gambler may witness an event, such as two sixes being rolled on a pair of dice, and draw the conclusion that this event is likely to occur in the immediate future.
The gambler will then base gambling decisions based on the assumption that two sixes are again going to be rolled. Likewise, a gambler may see a certain horse win at the racetrack, and make the assumption that this same horse is likely to win again soon. The state of mind generally occurs when a person new to gambling witnesses the event early on in their gambling experience, and bases future decisions on the witnessing of this single event.
This, however, is akin to assuming that if the first toss of a coin is heads, that all tosses that follow are also going to be heads, completely ignoring the other side of the same coin. That is to say, it is a very wrong conclusion to draw, and an especially dangerous one when a person intends on putting money on these assumptions.
Inverse Gambler’s Fallacy
Inverse gambler’s fallacy is a term that came about after the original coining of the term gambler’s fallacy. It is, simply, the opposite of the above mentioned term, hence the name inverse gambler’s fallacy. The term simply states that a gambler assumes that since he or she has witnessed two sixes being rolled, that all rolls of the dice after from then on are not going to be a repeat of the same event.
Both of these terms are, of course, not taking into account how statistics really work, and are both based on assumptions that are simply not true. Again, seeing a coin toss reveal heads, and assuming that coin tosses from then on are now not going to be heads, is not taking the whole situation into account.
Statistics or odds only hold real value when they are used over a period of time. Or, more accurately, when they are used to express the likelihood of an event occurring, taking into account many instances of the same event, and not a single instance.
Statistics must be applied to a series of events in order to make any sense at all. It makes no real sense to say that if a pair of dice have rolled sixes, that the very next throw will not again be sixes while you double down your bets. If, however, one tracks dice rolls over a period of thirty six times, being that the odds of sixes being rolled are one in thirty six, they may then begin to start making predictions as to when a pair of sixes will again be rolled. Even then, a much greater sample is best to start making predictions based on statistics. Hence the terms gambler’s fallacy, and inverse gambler’s fallacy, were created to express a skewed perception of statistics. Interestingly, the above two states of minds are very common in those who take part in gambling, more so then many would believe. It in fact makes up a large portion of decisions made while playing online pokies, as revealed by studies on the state of mind.