• Since the seminal paper of Gilovich, Vallone and Tversky (henceforth GVT) in 1985, most academic research has been unable to find statistical evidence to support the conviction of many that basketball players can get a “hot hand” – that is, when they start making more free throws than usual, they’re likely to continue to do so.
  • Belief in the hot hand in basketball thus became one of the most massive and widespread cognitive illusions cited in the literature on heuristics and biases.
  • However, a recent paper by Miller and Sanjurjo revived the hot-hand debate by pointing out a finite sample bias that GVT and other researchers had overlooked for three decades. After correcting for the bias, the authors argue that the data used by GVT actually provided evidence for the existence of the hot hand in basketball.
  • Failure to recognize the finite sample bias or its significance relates to the belief in the law of small numbers. It’s a reminder that this erroneous tendency is prevalent even among sophisticated researchers with quantitative training when they rely on intuition rather than computation, as Tversky and Kahneman warned in 1971.
  • Associated cognitive biases, such as the gambler’s fallacy and sample size neglect, could lead to systematic deviations from optimal decisions: Finite sample biases are often ignored without proper justification, and there is a common tendency to underestimate the sample size needed for valid statistical inference.

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The Author

Emmanuel Roman

Chief Executive Officer

Jamil Baz

Head of Client Solutions and Analytics

Helen Guo

Quantitative Research Analyst, Client Solutions and Analytics

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