Ft. Wayne. Indiana - 1956
A newlywed couple is looking froward to their new life and family. John and Susan plan to have three kids or so, hopefully at least one boy and one girl in the mix. Their first child is a beautiful baby girl, healthy and happy. They are proud parents and when they have their second child - another precious girl - again, they are happy.
John loves his two daughters, but thinks that it sure would be nice to have a son. Teach him to play football, mow the lawn, stuff like that. "Well," he thinks, "With two daughters, the odds are pretty high that the next one will be a boy."
When their third child arrives, it is again a girl. John was not disappointed and was happy to have another daughter, of course, but the urge to have a son was getting pretty strong by now. So he and Susan talked it over and decided to have one more child. John figured their odds of having a boy were super high now. Boy or girl, they'd be happy either way and stop at four.
What are the odds that the next one would be a boy? Before you answer, know that the probability of any family with four children to have at least one boy is about 94%.
HOWEVER... the actual probability of the fourth child being a boy is the same as for any of their other children - 50%. Does this seem obvious? Consider that an entire city is built on the fact that it is NOT obvious to many people. Las Vegas, Nevada.
The Gambler's Fallacy is a diabolical Virtual MindBlock created by our lizard brains (click here for an explanation Virtual MindBlocks and the lizard brain). It's based on the fact that subconsciously we calculate future probabilities based on past results.
Monte Carlo - 1913
The most famous mass incident of The Gambler's Fallacy happened at a Monte Carlo casino when the roulette wheel came up black 26 times in a row. How do you think the casino made out? They made a killing! The players lost millions because as the black spins started to mount, they bet more and more money on red, sure that it was overdue!
Then they kept playing red, feeling that a red streak had to balance out the long black streak. But just like with kids, the odds were 50-50 each spin (not counting the green space on the wheel).
Patterns and Loans
The lizard brain HATES uncertainty, and pure randomness is the ultimate uncertainty! So to feel more comfortable we look for patterns, even where no pattern exists. One of the common patterns we seek is the "averaging out" of outcomes. And we do that in many circustances where the outcome is not based on past results.
This can cause us to behave in ways that are counter to our own values and unfair! Studies have shown:
- Loan officers are less likely to approve a loan if they approved the previous unrelated application than if they denied the previous application.
- Baseball umpires are less likely to call a strike if they called the prior pitch a strike.
- Supervisors are less likely to give extremely high marks to an employee if the last review they gave was very high.
So what do we do when WE are making assessments? Recognize the situations where past performance has no bearing on future results, even though it feels like it should, and make better, more fair decisions.
What happened to the family who had four children? The fourth one was indeed a boy.
And wasn't I adorable? Yes, that is me! John and Susan are my parents and those three sweet little girls in the first picture are my sisters.