Theory and Decision

, Volume 78, Issue 4, pp 603–615

Exchangeability and the law of maturity

Authors

  • Fernando V. Bonassi
    • Google IncMountain View
    • Department of StatisticsCarnegie Melon University
  • Cláudia M. Peixoto
    • Instituto de Matemática e EstatísticaUniversidade de São Paulo
  • Sergio Wechsler
    • Instituto de Matemática e EstatísticaUniversidade de São Paulo
Article

DOI: 10.1007/s11238-014-9441-4

Cite this article as:
Bonassi, F.V., Stern, R.B., Peixoto, C.M. et al. Theory Decis (2015) 78: 603. doi:10.1007/s11238-014-9441-4

Abstract

The law of maturity is the belief that less-observed events are becoming mature and, therefore, more likely to occur in the future. Previous studies have shown that the assumption of infinite exchangeability contradicts the law of maturity. In particular, it has been shown that infinite exchangeability contradicts probabilistic descriptions of the law of maturity such as the gambler’s belief and the belief in maturity. We show that the weaker assumption of finite exchangeability is compatible with both the gambler’s belief and belief in maturity. We provide sufficient conditions under which these beliefs hold under finite exchangeability. These conditions are illustrated with commonly used parametric models.

Keywords

Law of maturityExchangeabilityGambler’s fallacyBelief in maturityBayesian statistics0–1 Process

Copyright information

© Springer Science+Business Media New York 2014