Get the latest tech news
The Gambler's Fallacy Is Not a Fallacy
I argue that rational Bayesians would often exhibit the gambler's fallacy.
Conclusion Given people's limited knowledge about the outcomes the random processes they encounter and the statistical mechanisms that give rise to them, they often should commit the gambler's fallacy. You might think natural Sticky and Switchy hypotheses centered around this would simply add or subtract a fixed amount (say, 0.1) to the probabilities depending on the state, as before: The “ stationary distribution ” of these two Markov chains is not 40/60—rather, for the Sticky hypothesis it’s around 38/62 and for the Switchy one it’s around 42/58, meaning that in the long run we would expect them to have these proportions of heads to tails, rather than 40-60.
Or read this on Hacker News