Theory and Decision

, Volume 68, Issue 4, pp 445–462

The hot hand belief and the gambler’s fallacy in investment decisions under risk


DOI: 10.1007/s11238-008-9106-2

Cite this article as:
Huber, J., Kirchler, M. & Stöckl, T. Theory Decis (2010) 68: 445. doi:10.1007/s11238-008-9106-2


We conduct experiments to analyze investment behavior in decisions under risk. Subjects can bet on the outcomes of a series of coin tosses themselves, rely on randomized ‘experts’, or choose a risk-free alternative. We observe that subjects who rely on the randomized experts pick those who were successful in the past, showing behavior consistent with the hot hand belief. Obviously the term ‘expert’ suffices to attract some subjects. For those who decide on their own, we find behavior consistent with the gambler’s fallacy, as the frequency of betting on heads (tails) decreases after streaks of heads (tails).


Hot hand beliefGambler’s fallacyExperimental economicsDecision making under risk

JEL Classification


Copyright information

© Springer Science+Business Media, LLC. 2008

Authors and Affiliations

  • Jürgen Huber
    • 1
  • Michael Kirchler
    • 1
  • Thomas Stöckl
    • 1
  1. 1.Department of Banking and FinanceUniversity of InnsbruckInnsbruckAustria