By Dan Monheit, 17.9.21
Question submitted from Karen, Lara
Apparently, there’s no such thing as luck — only hard work and good timing.
Tell that to Joan Ginther, who won the Texan lottery four times in ten years. Or perhaps Dutch cyclist Maarten de Jonge, who rescheduled his bookings on flights MH370 and MH17. You might even mention it to the 20 million Australians not currently living in Melbourne and therefore not lucky enough to be enjoying their 228th day of lockdown.
So much hard work. So much good timing.
We all know these people. The ones who get the rockstar parking spots, the meat trays at pub raffles and the quaddies on Cup Day. They put it down to their lucky undies, their lucky numbers, or the good karma that the universe has been desperately scheming to send their way.
How can this be?
Well guess what Karen. Today is YOUR lucky day! After all, what could be luckier than receiving a fortnightly newsletter (that you may or may not have actually signed up for), written by yours truly, that answers the EXACT question that’s been keeping you up at night?
Let’s do this!
Hot Hand Fallacy
The Hot Hand Fallacy is our tendency to believe that luck comes in waves, and that if we’re on a hot streak, there’s a good chance our luck will continue.
Back in 1985, Gilovich, Vallone, and Tversky pulled off one of the best excuses ever to watch countless hours of basketball. They decided to delve into the ‘Hot Hand’ phenomenon, all in the name of research.
For those unfamiliar, a ‘hot hand’ is the term given to a basketball player who hits a number of consecutive shots in a game. Two or three in a row and they’re ‘heating up’. Any more than that and they’re certifiably ‘on fire’.
Before diving into the data, the trio interviewed players and fans to get their hot take on the hot hand. Not surprisingly, both groups overwhelmingly (91%) agreed that players have a better chance of making a shot after sinking their last two or three. Seemingly, when you’re on, you’re on.
To confirm what everyone thought they knew, the researchers pored through historical stats, including the professional shooting records from the Philadelphia 76ers, free throw data from the Boston Celtics, and field goal percentages from a group of varsity players who shot hoops in a fan free environment.
Unfortunately, the hot hand was extinguished by cold hard facts. Despite a rise in confidence after hitting consecutive shots, the statistics proved that players were no more likely to make the next basket whether they’d made the last two or bricked them.
The Hot Hand Fallacy doesn’t just affect big time ballers. We see it when punters go all-in on red after hitting three blacks in a row. It’s also why people feel secure investing in companies and superfunds that have seen a steady rise in share price, no matter how many times they hear that ‘past performance is not an indicator of future performance.’
Humans are machines of pattern recognition. Our brains are wired to connect the dots and create meaning out of the randomness of life. It’s that power that allows Illuminati conspiracies to flourish, and also why we think some people are just destined to win in life after witnessing a recent string of luck. In the absence of complete information (in this case, we don’t know the person’s whole life story), our pattern-seeking brains can’t help but fill in the blanks and conclude that some people really do have all the luck.
For brands, knowing that customers will connect the dots and create their own stories means we don’t need to wait for big wins to look like we’re on a hot streak. Being consistent with good news — even if it’s talking up small wins — can be enough for our audience to weave a tale of unstoppable momentum and inevitable success.
Behaviourally Yours,
PS If you missed the last edition, you can still check out why good companies stay with bad software here.
Bad Decisions Podcast
Learn more about the Hot Hand Fallacy on episode 15 of the Bad Decisions podcast.
Got a question?
Is there something you’ve always wondered about?
Send it through to AskDan@hardhat.com.au
Want more?
Check out Dan’s latest chat with Mi3 about how Australian fintech Superhero is taking it to the big banks.
