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Abstract
People suffering from the hot-hand fallacy unreasonably expect winning streaks to
continue whereas those suffering from the gamblers' fallacy unreasonably expect losing
streaks to reverse. We took 565,915 sports bets made by 776 online gamblers in 2010
and analyzed all winning and losing streaks up to a maximum length of six. People
who won were more likely to win again (apparently because they chose safer odds than
before) whereas those who lost were more likely to lose again (apparently because
they chose riskier odds than before). However, selection of safer odds after winning
and riskier ones after losing indicates that online sports gamblers expected their
luck to reverse: they suffered from the gamblers' fallacy. By believing in the gamblers'
fallacy, they created their own hot hands.