Gambler's Fallacy and How to Avoid Losing Money Because of It
Fallacy: an assumption founded on an erroneous inference. In a casino setting, a certain fallacy is often believed to be true by a lot of players - gambler's fallacy. Most have probably never even heard of this, and even those who has still fall into its trap against their better judgment.
Gambler's fallacy is also known in other circles as the Monte Carlo fallacy or the fallacy of the maturity of chances. This fallacy is a gambler's belief that in a game that employs random and equal chance, probability is still a factor in determining the outcome of the game. One of the most common examples is in a toss coin, if heads comes up nine times in a row, the gambler will have to conviction to believe that tails will come up next.
In fact, the odds of heads coming up in the next toss would be the same: 50% or 1-1. Previous event will have no effects on future events whatsoever because the coin has no memory or does not record any of the previous events, nor will the outcome of these events affect the outcome of the following. The fallacy will have the player believe that the previous nine tosses has an effect on the tenth.
Gambler's fallacy also applies true in many casino games. If the game that one is playing in a casino gives out results that are statistically independent, the gambler's previous games cannot be used as a basis in deciding what his next move is.
Another example would be in playing the lottery. If a gambler keeps on using the same set of numbers and decides to change his strategy by changing numbers, will he increase his chance of winning? The answer is no. Either set of numbers has the same chance of being drawn as all other numbers in a lottery draw.
How does knowing what gambler's fallacy help a gambler? In a roulette game for instance, the tendency is for the gambler to bet on black after red has come up three times, believing that it is "due". But knowing that this is a fallacy will enable him to concentrate more in what he is going to do beyond the game.
Bottom line is, the short-term in gambling is really no basis in plotting how you will win money, you should have a correct strategy. And this strategy does not pertain to guessing the outcome of a roulette spin or a lottery draw, but on how you will place your bets or how you intend to maximize your winnings.