An examination of the latest trends and tools for learning and training in business. Human resources and the challenge of learner motivation. Mastering your business training alignment strategy.
We often assume that when two events are related in one way, they must also be related by cause. We confuse coincidence with cause. Just because two things connect or coincide, doesn’t mean that one caused the other.
At other times you might find that emotion plays a subtle role. Most of us use phrases like “my luck ran out” and “I’m due for a win” when usually there is no ultimate relationship between your odds of success in the current venture than in the prior. We call this the gambler’s fallacy. One example of the influence of the gambler’s fallacy interfering with decision making was documented in a recent publication from the National Bureau of Economic Research (Chen, Moskowitz, & Shue, 2016). The article identifies a pattern of behavior among professionals that demonstrates application of the gambler’s fallacy to successive decision making patterns. In essence, when a professional makes a series of topically or conceptually similar decisions (on independent cases), they are more likely to invert positive or negative recommendations in the wake of a series of prior recommendations. If they made a series of positive loan recommendations, the likelihood of a negative recommendation increases, even when a negative recommendation is not warranted by the data. The team found the same pattern in baseball umpires calling strikes, and immigration workers recommending asylum. Just as people falsely believe that if they’ve flipped a coin twice, and got heads both times, they are more likely to get tails on the next flip. Of course that is the whole point of the gambler’s fallacy. The odds remain 50/50 no matter how many times you flip the coin. But the fallacy is deeply ingrained in the ‘beliefs’ and emotional reality of most people. The research team also found that the more experienced employees were less likely to suffer the effects of the gambler’s fallacy – suggesting that less experienced employees were more likely to include emotion and instinct in their decision making than more experienced employees (Chen, Moskowitz, & Shue, 2016).