Fantasy Baseball Mind Games: Gambler’s Fallacy

Han Solo, gambler. Photo courtesy of the Mos Eisley Cantina.

"Never tell me the odds!–HAN SOLO, Star Wars Episode V: The Empire Strikes Back"

When it comes to probability, a lack of understanding can lead to all kinds of bad. Today we’re going to talk about the Gambler’s Fallacy.

In the Gambler’s Fallacy, an individual incorrectly believes that the onset of a certain random event is less likely to happen following an event or a series of events. This line of thinking is incorrect because past events do not change the probability that certain events will occur in the future.

A perfect example is the simple coin flip. Everyone accepts that the the probability between heads and tails is 50/50. Let’s say you flip the coin and it comes up heads. Then you flip it for a second time and it comes up heads again. The gambler’s fallacy leads some to believe that the odds-on favorite is for the third flip to show up tails. After all, it’s been heads twice; it must show up tails at some point.

The truth is the the probability of this third flip is 50/50. Every coin flip is an independent event, which means that any and all previous flips have no bearing on future flips.

It’s the gambler’s fallacy to think that just because a batter has gotten two straight hits, that he surely must be heating up and will get a hit his next time up. Likewise, if the batter has gone 0 for 3, it’s the gambler’s fallacy to assume that “he’s due” for a hit next time up.

Instead, focus on a player’s underlying skill levels. Don’t fixate pitch to pitch or from at bat to at bat. By focusing your research on the fundamental skills of a player – such as a batter’s eye at the plate or a pitcher’s ability to throw strikes – you can shield yourself from the noise of illustrative statistics that may or may not lead to a trend. Regression to the mean is a statistical certainty, but you can’t predict it pitch to pitch.

Likewise, some of those players you are convinced will pull out of their first half slump and return to respectability will simply finish the year on the same down note, posting career low numbers. Others that you are convinced will fall back from their first start will continue their success and wind up with a career year. Of course, others do as we expect and end the year performing exactly as expecting, despite high and low swings during the season. Don’t chase the trends; study their skills and look for changes in approach or context that may be leading to a change in performance.

We’re all gamblers if we play fantasy baseball. The gamblers that beat the house are the ones who don’t fall for the fallacy that they can predict a coin flip with any better accuracy than 50/50.

Other Mind Games: (Herd Behavior, Hindsight Bias, Mental Accounting, Anchoring).