Not as Irrational as We Think?
New research helps explain anomalies like the gambler’s fallacy and other irrational human behavior patterns. Researchers found that many “irrational” decisions are made because of erroneous beliefs. “Where people go astray is when they base their decisions on beliefs that are different than what is actually present in the world,” says Shawn Green, one of the study’s authors. “In the coin example, if you toss a coin five times and all five times are heads, should you pick heads or tails on the next flip? Assuming the coin is fair, it doesn’t matter — the five previous heads don’t change the probability of heads on the next flip — it’s still 50 percent — but people nevertheless act as though those previous flips influence the next one.” A similar effect is even seen in “an optimal, fully rational computer learner given similar incorrect beliefs about the world.” (HT: Eric M. Jones) [%comments]