Chapter 18 – When Intuition Differs From Relative Frequency
People ignore relative frequency sometimes. People think coincidences have a low probability of
occurring. Intuition causes us to think this. A coincidence is a surprising concurrence of events,
perceived as meaning fully related, with no apparent causal connection. Many people think that
coincidences are very improbable. The truth is that someone, somewhere, someday will experience one.
It is not unlikely that something surprising will happen.
The misconception that long-run frequency should apply in the short run. This is gambler’s fallacy. The
belief in the law of small numbers is that small samples are highly representative of the population.
Example: HHHTTT vs. HTHHTT, both are equal probability, but the 2 seems more probable, coin is fair
so each has equal probability.
The gambler’s fallacy leads to poor decision making. Independent chance events do not affect the
probability of another event. Example: gambling – string of luck isn’t followed by a string of bad luck.
The gambler’s fallacy only applies to independent events. It does not occur when one event affects the
probability of anoth