The Gambler's Fallacy - What Is It?
Well, the term 'Gamblers Fallacy' is the irrational belief that if something happens more frequently during a period of time, then it will happen less frequently in the future or if something happens less frequently during a period of time, then it will happen more frequently in the future.
This is a common thought that gamblers tend to have, whether they are experienced or novice gamblers, the idea is still considered when making decisions, which more than not will lead to mistakes. To master the game of gambling, you obviously need your fair share of luck, but staying level headed and logical will take you a long way. Which is the complete opposite approach of the Gambler's Fallacy.
How Does it Work?
Before any action has taken place, the probability of a result occurring is 1 and will always be the same. Any result can happen, some results are more likely than others but anything can happen. The problem with Gambler's Fallacy is that people tend to change the probability of a result based on the previous results, which is flawed.
Let's take the following example to show how people are misled by previous results: It's possible to hit the colour red on a roulette wheel five times in a row.
- The odds for this are 1/2 x 1/2 x 1/2 x 1/2 x 1/2 = 1/32 (31-1)
- The odds for it to not occur are 31/32 (1-31)
- Remember, the odds do not change before every spin based on the previous results, it will always stay 1/2 on every spin and hitting red five times in a row will always be 1/32.
After three of four spins, this is where the irrational thought takes place. Gamblers tend to think that because the ball has landed in red for the last three or four spins, the odds of it hitting black has now increased, which it hasn't.
Just because the previous results have been unlikely, it doesn't change the probability of any future results and the odds do not change. Remembering that the probability of a result occurring is 1 is key to maintaining a clear mind when gambling, if not you open yourself up to losing a lot of money.
How Does it Affect Thinking?
As a gambler, if you don't have a clear mind and a strategy, it can result in huge losses and problems in your life outside of the gambling world. The Gambler's Fallacy affects thinking as it triggers irrational thought processes - it's essentially a lack of understanding about probability and odds.
But, it can also be a sign of addiction and desperation in a gambling aspect. During a session at the casino, you can lose a lot of money very quickly if you fall into the mindset of Gambler's Fallacy. If you've been on a table where the last three to four spins have all landed on red, maybe you're initial thought is to place a bet on the opposite colour because "It's due to hit black".
This is a typical instance where people start to up their betting stake to try and take advantage of a pattern that could be evolving, but it is all chance. You end up battling against your own thoughts rather than the casino, but the casino is always going to win if you start to make large, desperate bets. It's important to ignore the previous pattern and just bet the same amount you usually do or even take a break away from the table to see how the ball falls.
It Doesn't Always Apply
Whilst Roulette is a typical example of where the Gambler's Fallacy definitely applies. There are other games where it doesn't necessarily apply as a fallacy. Take Poker for example, depending on what cards we hold and the cards on the board, we can estimate the likelihood of a similar card falling on a later street or how likely it is that our opponents hold similar cards.
This is an occasion where past actions do affect the next move. Therefore, the term fallacy wouldn't apply to this situation as the odds are always changing throughout the game. The main focus is understanding the game you are playing, the probability and odds involved in that game and keeping a clear head when playing, then you will avoid desperate betting behaviours and save money in the process.