This paper examines the misconception and the false belief of the investor in the game of roulette under the influence of the two theories of probability under behavioural finance: Gamblers fallacy and Hot hand theory. This paper’s first contribution is to identify and outline the existence of this bias belief previously demonstrated and then further demonstrate the existence of the biasness in an individual mindset in the game of roulette. This paper aims to carry out a study to differentiate How these two-probability theories have a different influence on the investor in gambling and casino, and how these two theories produce a different result for the investor.
To investigate and analyse the two-opposite theory under probability theory, this …show more content…
However, under certain situation, the knowledge of past pattern misguides and lead an investor to make an irrational decision where the outcome of the result relies on complete probability. Gambler’s fallacy and the hot hand theory under the behavioural finance characterize an individual perception in an event of probability as non-autocorrelated random sequence. (SUNDALI & CROSON).
The most extreme example of this bias belief was witnessed in august 18,1913, when the roulette ball fell in black 26 times at monte carlo casino which caused gamblers to lost millions of francs betting against black with the misperception of a red streak to occurred. Thus, gamblers fallacy or monte carlo fallacy is the false belief that a random process or event become less random and become more predictable after a series of same outcome. (Kavouras,
To investigate and analyse the two-opposite theory under probability theory, this …show more content…
However, under certain situation, the knowledge of past pattern misguides and lead an investor to make an irrational decision where the outcome of the result relies on complete probability. Gambler’s fallacy and the hot hand theory under the behavioural finance characterize an individual perception in an event of probability as non-autocorrelated random sequence. (SUNDALI & CROSON).
The most extreme example of this bias belief was witnessed in august 18,1913, when the roulette ball fell in black 26 times at monte carlo casino which caused gamblers to lost millions of francs betting against black with the misperception of a red streak to occurred. Thus, gamblers fallacy or monte carlo fallacy is the false belief that a random process or event become less random and become more predictable after a series of same outcome. (Kavouras,