No. 49 · Risk · Fallacy
Hot-Hand Fallacy
A winning streak feels like momentum, but it is often luck on a good run.
In the Almanac
“Basketball’s hot hand”, 1985 · “ARK Invest”, 2020–2022
Both stories in full, three ways to use it and where it misleads.
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Questions
What is Hot-Hand Fallacy?
The Hot-Hand Fallacy is believing a winning streak makes the next win more likely. A famous 1985 basketball study found streaks looked like chance, though later work suggests a small effect. ARK Invest's fund soared in 2020, but much of the money arrived after the run, and many investors lost.
How do you avoid Hot-Hand Fallacy?
When something has been winning lately, ask what is driving it and whether those causes still hold. Set your plan in advance so a streak doesn't make the decision for you.
When does Hot-Hand Fallacy matter?
Hot-Hand Fallacy is one of the 32 mental models for risk, the situations where you ask: What could go wrong, and what will I do if it does? Within that, it belongs to “Misreading chance”, alongside Availability Bias, Conjunction Fallacy and Gambler’s Fallacy.
What is an example of Hot-Hand Fallacy?
Two stories show it at work: Basketball’s hot hand (1985) and ARK Invest (2020–2022). Both are told in full in The Mental Models Daily Almanac, which has two stories for each of its 365 models.
Which mental models are related to Hot-Hand Fallacy?
Halo Effect, Regression to the Mean and Bandwagon Effect. Hot-Hand Fallacy itself comes from fallacy.