Bias in betting ; How it affects our decisions (3)

welcome back, and we continue from where we stopped after our last article. It was on betting bias, based on “making selections with the most likely outcome”.
Hit this link to catch up with what we now know.
When i started writing on this topic i didn’t find it as interesting. Not until i realised that its something that affects ALL punters not considering how long you have been betting.

Its a long and interesting thread, they say an average black man does not like reading. But truth be told, even in the betting word You have to read to gain information.

Next we would talk about another type of cognitive bias…

The Gamblers Fallacy

It is also known as the positive recency bias. This refers to belief that the outcome of a previous event affects the probability of another outcome. In most cases in relation to events that are recent.
To many when an event has a better result than suggested by probability, it is only normal to still expect a good result even on the next game. In reality though the opposite belief does happen sometimes. Individuals just believe that if an event keeps repeating an outcome, that outcome would be constant for a while.
Truth be told, most events are consisted of independent outcomes, the likelihood of future outcomes are independent of past results.
I hope i did not lose you there

ILLUSTRATION

Lets say you are in a paper tossing contest with another individual. You take the coloured part while he sticks with the plain side.

Now on 7 different occasions the paper has been tossed and it has landed on the plain side. Hence leading him to believe that his luck is riding high. This baseless belief leads him to offer you a N1000 bet that it would land on the plain side again.
But you are thinking otherwise because you believe that since he has won it 7 times , your coloured pick should turn up next.

Question is which of you has the right theory?
Answer is, NONE?

This is because the probability of either of you winning the paper toss is 50%. Each time the paper is tossed is an independent event, regardless of past outcomes. It is very unlikely that a paper toss will land on the same side 90% of the time. The point is you and your friend aint betting on this, each of you is betting on the next paper toss. And that is an INDEPENDENT EVENT.

ILLUSTRATION II
In this example, i would be using virtual betting and the betting in Colour as case study.
Going into some betshops you must have seen individuals trying to keep track of past events. You would notice them trying to find out which colour would turnup next and which wont.

In a situation where the ball lands on blue 6 times consecutively, some bettors would bet on the blue because that must be a hot colour. Others would pick yellow and some others black.
Truth is the probability of getting any of these colours is the same as in previous spins.
Gambling on games with independent outcomes are difficult if selections are made based on previous results. People who are guilty of Gamblers Fallacy tend to increase their stakes due to this misconception.

Knowledge is power they say… Use what you know to Earn!