Problema Solution
One sports fan, in describing how his mediocre team had gone from a five-game winning streak to a five-game losing streak had this summary: "The law of averages was bound to catch up with a team like this." Is this statement an application of the law of large numbers, an example of the gambler's fallacy, or neither.
This statement is an example of the law of large numbers.
This statement is an example of the gambler's fallacy.
This statement is neither an example of the law of large numbers nor the gambler's fallacy.
Explain your answer.
Answer provided by our tutors
This statement is an example of the Gambler's fallacy.
Gambler's fallacy arises out of a belief in a "law of small numbers", or the erroneous belief that small samples must be representative of the larger population. According to the fallacy, "streaks" must eventually even out in order to be representative, and in our case it is
if there are five-game winning streak there must be five-game losing streak.