Independence of events, and errors in understanding it

Abstract

This article outlines errors that may occur when people predict event outcomes. The focus is on how our tendency to perceive independent events as connected, consistent with tenets of Gestalt Psychology, biases our expectations. Two well-documented phenomena that occur when people make predictions after a run of a particular outcome— the “gambler’s fallacy” and the “hot hand”—are used to illustrate the issue, and research is presented that highlights the importance of misperceptions of independence. Novel implications and hypotheses are presented that are generated from use of this gestalt approach.