The Hot Hand in Basketball: On the Misperception of Random Sequences
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What they found
Fans, players, and coaches overwhelmingly believed that a basketball player who has made several shots in a row is 'hot' and more likely to make the next one. The authors tested this with shooting records from the Philadelphia 76ers, free-throw data from the Boston Celtics, and a controlled shooting experiment with Cornell players, and found no evidence of streak dependence: the probability of a hit after a run of hits was no higher than after a run of misses. People perceive streaks in random sequences because they expect random sequences to alternate more than they actually do.
What you can use
- A string of winning trades feels like being 'in the zone', but this is the same misperception as the hot hand.
- Random sequences contain longer streaks than intuition expects; a five-trade winning streak proves little about the sixth.
- Adjusting size up after a streak, or believing a strategy 'has momentum', is the bias in action.
Caveats
Later re-analyses (Miller and Sanjurjo, 2018) found a subtle statistical bias in the original test and some evidence of a small real hot-hand effect in controlled shooting. The core lesson about misperceiving randomness stands.
Tags: behavioral, randomness, streaks, psychology
Summaries are our own reading of the paper, not the authors' words. Educational only, not advice. Discuss it in Book Club.