Hot Hand Effect

 Self Introduction

Presented by
 Muhammad Bilal Rafiq
 M.COM-III
 SAP ID-21176
Points to be covered..
 DEFINITION
 THE HOT HAND EFFECT IS TYPICALLY
DISCUSSED IN A WAY
 EVIDENCE FOR THE HOT HAND EFFECT
 PSYCHOLOGISTS AND STATISTICIANS EXAMINE
 RESEARCH ON GAMBLING
 HOT HAND EFFECT IMPLICATIONS
HOT HAND EFFECT

What
is
Hot Hand Effect?
What is Hot hand effect

 Many sports fans, commentators and players share a

belief that a player can for some period of time have
the hot hand; that is, be “in the zone,” “on a roll,”
“inescapable,” or “playing their fantasy.” The hot
hand effect refers to the tendency for people to expect
streaks in sports performance to continue.
Exponents

 For example:

people believe that a basketball player’s

chances of making a shot are and gamblers
believe in bettors being “on fire” and having
lucky winning streaks.
About

The hot hand effect is typically discussed in

two ways:
 The basketball-shooting example, the hot
hand effect pertains to the belief that a hot
player has an increased chances of making
the next shot he or she takes.
 Recently, hot hand effect has been used
more generally to refer to when people
expect streaks to continue for any
sequence of events with just two outcomes
(e.g., hits vs. misses in basketball shooting,
or wins vs. losses in roulette betting).
Important to make out between two terms:

 The hot hand effect and the hot hand (also

sometimes labeled positive). The former
refers to people’s beliefs about hot hand
performances, while the later refers to the
actual rate of hot streaks in sports
performances.
Evidence for the Hot Hand Effect

 the hot hand in basketball is quite common, analyses of

the shooting statistics of professional basketball players
playing for the top teams showed that, in fact,
basketball players do not get the hot hand.
 The difference between people’s perceptions of streaks
and the existence of actual streaks was confirmed with
a controlled experiment.
 College basketball players made free throws. Before
each shot, both the players and observers believed that
some players were hot while shooting free throws, but
only 1 out of the 26 players actually showed positive
fulfill all the needs.
Psychologists and statisticians examined

 Psychologists and statisticians examined athletic

performances from a variety of sports other than
basketball. They analyzed playing records and tested for
one or more of the following indicators of the hot hand
positive dependencies, unusually long streaks, or an
unusually high number of streaks. researchers have
failed to document evidence for the hot hand in baseball
hitting and scoring, volleyball scoring, and baseball.
Overall Research:

 The bulk of research findings indicate that actual hot (and

cold) playing streaks are more odd in sports than people
believe. However, some evidence for streaky performances
was found in bowling, hockey, horseshoes, tennis, and golf
putting in a laboratory setting. This seems to suggest turn-
based, uniform, individual sports are more likely to yield
evidence of hot hand performances.
Research on gambling

Gamblers’ responses to a survey shows that they

believe that three distinct factors contribute to
winning: chance, skill, and luck. Belief in the power
of skill and luck could account for the findings that
gamblers playing.
Psychological Mechanism of the Hot Hand
Effect

Belief in the hot hand has been explain within the structure of the
representative heuristic. People believe that very short sequences should
be representative of long sequences produced by the same process. For
sequences produced by a random process of balanced in unrealistically
short runs, and not attractive in any obvious manner. Hence, there is a
tendency for people to expect an excessive number of alternations and
short streaks
 For example: people’s mistaken belief of what a
random sequence should look like leads them to see a
basketball player who has just hit four baskets in a row
as hot, when in fact it is not unusual for a truly random
sequence
Hot Hand Effect Implications

 The hot hand effect has implications for financial

decisions and behaviors, such as gambling or investing
money. The tendency for people to see unusual streaks
that do not actually exist can cause them to bet money
on outcomes as they predict.
For example:
 Research shows that Once money becomes involved, the
irrational and illogical belief of the hot-hand fallacy can begin
to have more serious consequences. people sometimes
overinvest in stocks that are doing well in the short term and
not think about the long-term behavior. Predicting outcomes
based on a misperception of streaks and short sequences can be
financially costly.
THANK YOU