Decision-Making under the Hot-Hand Fallacy

The hot-hand fallacy has long been considered a widespread cognitive illusion with important consequences for decision-makers. A sports player may misinterpret a lucky streak of successful shots, and pursue a more aggressive strategy that hurts one’s performance. A physician prone to the hot-hand fallacy may also misinterpret random streaks of poor patient outcomes, and respond by treating the next patient more defensively, incorrectly believing that another poor outcome is likely.