Decision Making Under the Gambler’s Fallacy: Evidence from Asylum Judges, Loan Officers, and Baseball Umpires

S-Tier
Journal: Quarterly Journal of Economics
Year: 2016
Volume: 131
Issue: 3
Pages: 1181-1242

Authors (3)

Daniel L. Chen (Toulouse School of Economics (...) Tobias J. Moskowitz (not in RePEc) Kelly Shue (not in RePEc)

Score contribution per author:

2.691 = (α=2.02 / 3 authors) × 4.0x S-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We find consistent evidence of negative autocorrelation in decision making that is unrelated to the merits of the cases considered in three separate high-stakes field settings: refugee asylum court decisions, loan application reviews, and Major League Baseball umpire pitch calls. The evidence is most consistent with the law of small numbers and the gambler’s fallacy—people underestimating the likelihood of sequential streaks occurring by chance—leading to negatively autocorrelated decisions that result in errors. The negative autocorrelation is stronger among more moderate and less experienced decision makers, following longer streaks of decisions in one direction, when the current and previous cases share similar characteristics or occur close in time, and when decision makers face weaker incentives for accuracy. Other explanations for negatively autocorrelated decisions such as quotas, learning, or preferences to treat all parties fairly are less consistent with the evidence, though we cannot completely rule out sequential contrast effects as an alternative explanation. JEL Codes: D03, D08, G02.

Technical Details

RePEc Handle
repec:oup:qjecon:v:131:y:2016:i:3:p:1181-1242
Journal Field
General
Author Count
3
Added to Database
2026-01-25