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

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  • Jürgen Huber
  • Michael Kirchler
  • Thomas Stöckl

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  • Jürgen Huber & Michael Kirchler & Thomas Stöckl, 2010. "The hot hand belief and the gambler’s fallacy in investment decisions under risk," Theory and Decision, Springer, vol. 68(4), pages 445-462, April.
    • Handle: RePEc:kap:theord:v:68:y:2010:i:4:p:445-462
    DOI: 10.1007/s11238-008-9106-2
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    References listed on IDEAS

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    1. Rachel Croson & James Sundali, 2005. "The Gambler’s Fallacy and the Hot Hand: Empirical Data from Casinos," Journal of Risk and Uncertainty, Springer, vol. 30(3), pages 195-209, May.
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    8. Burton G. Malkiel, 2005. "Reflections on the Efficient Market Hypothesis: 30 Years Later," The Financial Review, Eastern Finance Association, vol. 40(1), pages 1-9, February.
    9. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    10. Fama, Eugene F, 1991. "Efficient Capital Markets: II," Journal of Finance, American Finance Association, vol. 46(5), pages 1575-1617, December.
    11. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
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    13. Fama, Eugene F, 1970. "Efficient Capital Markets: A Review of Theory and Empirical Work," Journal of Finance, American Finance Association, vol. 25(2), pages 383-417, May.
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    3. Jia, Z. Tingting & McMahon, Matthew J., 2020. "Being watched in an investment game setting: Behavioral changes when making risky decisions," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 88(C).
    4. Giovanni Ferri & Matteo Ploner & Matteo Rizzolli, 2016. "Count To Ten Before Trading: Evidence On The Role Of Deliberation In Experimental Financial Markets," CERBE Working Papers wpC07, CERBE Center for Relationship Banking and Economics.
    5. Paradiso, Antonio & Kumar, Saten & Margani, Patrizia, 2014. "Are Italian consumer confidence adjustments asymmetric? A macroeconomic and psychological motives approach," Journal of Economic Psychology, Elsevier, vol. 43(C), pages 48-63.
    6. Duttle, Kai, 2015. "Disentangling two causes of biased probability judgment: Cognitive skills and perception of randomness," Ruhr Economic Papers 568, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    7. Rieger, Marc O. & Wang, Mei & Phan, Thuy Chung & Gong, Yujing, 2022. "Trend following or reversal: Does culture affect predictions and trading behavior?," Global Finance Journal, Elsevier, vol. 54(C).
    8. Bao, Te & Corgnet, Brice & Hanaki, Nobuyuki & Riyanto, Yohanes E. & Zhu, Jiahua, 2023. "Predicting the unpredictable: New experimental evidence on forecasting random walks," Journal of Economic Dynamics and Control, Elsevier, vol. 146(C).
    9. Song, Jian & Houser, Daniel, 2023. "Asymmetric shocks in contests: Theory and experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 216(C), pages 243-267.
    10. Füllbrunn, Sascha & Luhan, Wolfgang J., 2015. "Am I my Peer's Keeper? Social Responsibility in Financial Decision Making," Ruhr Economic Papers 551, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    11. Stöckl, Thomas & Huber, Jürgen & Kirchler, Michael & Lindner, Florian, 2015. "Hot hand and gambler's fallacy in teams: Evidence from investment experiments," Journal of Economic Behavior & Organization, Elsevier, vol. 117(C), pages 327-339.
    12. repec:zbw:rwirep:0551 is not listed on IDEAS
    13. Mathieu Chevrier & Brice Corgnet & Eric Guerci & Julie Rosaz, 2024. "Algorithm Credulity: Human and Algorithmic Advice in Prediction Experiments," GREDEG Working Papers 2024-03, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    14. Hommes, Cars & Makarewicz, Tomasz, 2021. "Price level versus inflation targeting under heterogeneous expectations: a laboratory experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 182(C), pages 39-82.
    15. Suetens, Sigrid & Tyran, Jean-Robert, 2012. "The gambler's fallacy and gender," Journal of Economic Behavior & Organization, Elsevier, vol. 83(1), pages 118-124.
    16. Ferri, Giovanni & Ploner, Matteo & Rizzolli, Matteo, 2021. "Trading fast and slow: The role of deliberation in experimental financial markets," Journal of Behavioral and Experimental Finance, Elsevier, vol. 32(C).
    17. Sascha Füllbrunn & Wolfgang J. Luhan, 2015. "Am I my Peer‘s Keeper? Social Responsibility in Financial Decision Making," Ruhr Economic Papers 0551, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    18. Sune Ferreira-Schenk & Zandri Dickason-Koekemoer, 2023. "Analysing the Factors Affecting the Long-term Investment Intention of Investors," International Journal of Economics and Financial Issues, Econjournals, vol. 13(1), pages 112-120, January.
    19. Yuan, Jia & Sun, Guang-Zhen & Siu, Ricardo, 2014. "The lure of illusory luck: How much are people willing to pay for random shocks," Journal of Economic Behavior & Organization, Elsevier, vol. 106(C), pages 269-280.
    20. Robert Amano & Jim Engle-Warnick & Malik Shukayev, 2011. "Price-Level Targeting and Inflation Expectations: Experimental Evidence," Staff Working Papers 11-18, Bank of Canada.
    21. Robles-Zurita, José, 2018. "Alternation bias and sums of identically distributed monetary lotteries," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 72(C), pages 78-85.
    22. Maximilian Späth & Daniel Goller, 2023. "Gender differences in investment reactions to irrelevant information," CEPA Discussion Papers 67, Center for Economic Policy Analysis.

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    More about this item

    Keywords

    Hot hand belief; Gambler’s fallacy; Experimental economics; Decision making under risk; C91; D81; G10;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)

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