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.