2018/01/01 by Joshua B. Miller, Adam Sanjurjo · 185 citations
Computer Science · Economics, Econometrics and Finance · Mathematics · #Computer science #Data Analysis with R #Econometrics #Fallacy #Mathematics #Measure (data warehouse) #Philosophy #Range (aeronautics) #Selection bias #Sequence (biology) #Sports Analytics and Performance #Statistical Methods in Clinical Trials #Statistics #econ.GN #q-fin.EC
paper · pdf · doi:10.3982/ecta14943
published in Econometrica 86(6), 2019-2047 (Wiley)
openalex publication_date 2018/01/01 · arxiv created 2019/02/04 · arxiv updated 2019/02/05 · openalex created_date 2020/11/23 · openalex updated_date 2026/08/05
We prove that a subtle but substantial bias exists in a common measure of the conditional dependence of present outcomes on streaks of past outcomes in sequential data. The magnitude of this streak selection bias generally decreases as the sequence gets longer, but increases in streak length, and remains substantial for a range of sequence lengths often used in empirical work. We observe that the canonical study in the influential hot hand fallacy literature, along with replications, are vulnerable to the bias. Upon correcting for the bias we find that the long-standing conclusions of the canonical study are reversed.