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Let’s Talk About FoodInvestments–some investors wrongfully assume that repeated increases (or decreases) in a stock price in several consecutive trading sessions should be followed by a reverse in the trend. These expectations lead traders to the mistake of either holding on to a losing position for too long or closing a winning position too quickly without fully exploiting its potential.Expecting a child in the past – before the advancements of modern medical science, people had to wait till birth to see if their child was a girl or a boy. There are documented cases when parents changed their anticipation based on other births that already happened in the area. Here the fallacy sounds like this: “The last four kids born in town this year were boys, so I’m afraid mine, which is next, would be a girl.” This is a case of seeing patterns in small samples and extrapolating them to the entire population. Also, they expected a self-correction due to the belief in a balanced population.
There are peer-reviewed articles which prove that even scientists are susceptible to the gambler’s fallacy. When conducting research scientists could make less than optimal decisions about the sample size that should be subjected to a planned experiment. The fallacy is also evident in cases when they have to estimate the need for repeating the experiment with another sample.
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