The Zurich Axioms by Max Gunther

Author:Max Gunther
Language: eng
Format: epub, pdf
Publisher: Harriman House

Minor Axiom VIII

Beware the Gambler’s Fallacy

Says the gambler: “I’m hot tonight!” Says the lottery-ticket buyer: “This is my lucky day!” Both are working themselves into a state of expectant euphoria in which they will put money at risk with less than their normal prudence. Both are likely to be sorry.

The Gambler’s Fallacy is a peculiar variety of orderly illusion. In this case the perceived order is not in the chaotic work all around, but inside, in the self. When you say you are ‘hot’, or you get the feeling that today is your lucky day, what you mean is that you are temporarily in a state in which random events will be influenced in your favor. In a disorderly world, with events whirling wildly around in all directions, you are a calm island of order. Events in your vicinity will stop the horseplay and obediently march to your tune. Roulette wheels and slot machines will click into place for you. Cards will fall your way. Horses will run their hearts out for you. Any lottery ticket you buy will be a winner. Should you decide to play the stock market and select an investment by jabbing a knifepoint into a newspaper while blindfolded, your stock will double by next week. You can’t lose!

Like hell you can’t.

It is surprising how many smart people allow themselves to be fooled by the Gambler’s Fallacy. It shows up wherever money is wagered but is particularly prevalent around gambling casinos (hence its name).

One of the most often-heard bits of useless advice at Las Vegas and Atlantic City is that you should “test” your luck every night before doing any serious betting. Indeed, some otherwise practical textbooks on gambling solemnly suggest this. The idea is that you place a few small bets at first – drop a couple of bucks into a slot machine for instance – to see how your luck is running. If the machine swallows your offering without even saying thanks, you figure the deck of fate is stacked against you that night, so you might as well go back to your hotel room and watch TV. But if the machine returns your offering with interest, then you are ready for the big-time dice tables or the wheel.

All kinds of people believe in this illusion of order. The high rollers believe in it and so do the nickel-and-dimers. The rich who come to the casinos in furs and Ferraris believe in it, and so do those who will barely be able to afford a bus ticket home if they lose. It might be that all of us believe in it for some part of our lives.

Like many of these illusions, the Gambler’s Fallacy has a lot of appeal. It seems true. In its cockeyed way, it has a rational sound.

Everybody can recall episodes from his or her own experience that seem to support it. If you play bridge, poker, or Monopoly with any regularity, you are keenly aware that there are some nights

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