Skill vs. Luck

It turns out that the human mind is not good at interpreting the difference between ‘lucky’ and ‘good’.

Jordi Brandts and colleagues got a group of students to predict a sequence of five coin tosses, and then selected the best and the worst predictor. They then asked other subjects to bet on whether the best and worst predictor could predict another five coin tosses. The subjects were told that they would bet on the worst predictor from the first round, unless they paid to switch to the best predictor.

82% of subjects paid to make the switch….These people weren’t just idiots plucked from the street. They were fourth year finance undergraduates at one of the best universities in Spain.

The human brain is terrible with the concept of randomness.  We desperately want to assign mental patterns to this, which is of course, a game pattern that game designers abuse endlessly.

One comment

  1. Very good point.

    I’ve had arguments with folks in the past about probability and chance not being the same thing.
    There is always a chance of something happening or not happening, regardless of the probability or odds.

    Just because ten heads in a row is very unliely, does not mean it can’t happen.

    If you have not seen this yet, you will hopefull enjoy it:

    See this video first (under 3 minutes long) by illusionist Derren Brown, and what you see is not a trick at all, he actually tosses heads ten times in a row: http://www.youtube.com/watch?v=X1uJD1O3L08

    Then when done see this to find out how he managed to do it (if you have not figured it out already):
    http://www.youtube.com/watch?v=RAiBdiqVjvw
    I suggest jumping to 1:26 and then watch his reveal of the coin toss.

    He says it best from 1:30 to 1:43, I’d love to quote it here but that would give things away a little to early.