Independent events are expected to self-correct, so a run of one outcome is taken to make the other due.
After four reds, black is not more likely. The Monte Carlo casino in 1913 saw black come up 26 times running, and the house took a fortune from players betting on the correction.
In practice
- An investor who has had four losing quarters increases position size because a good one is due.
- A hiring manager who has rejected six candidates in a row starts believing the next must be better, and it is the same pool.
- Further reading
- Wikipedia
- Subject
- Decision-making & Reasoning
- Essay
- The catalogue of predictable errors