A belief in trend reversal requires access to cognitive resources

ABSTRACT

There are two research traditions studying people's reactions to random binary events: one concerns serial choice reaction times, the other concerns predictions of events in a series. The present studies focused on comparing expectations between these two approaches. We formed and tested a general hypothesis that, regardless of the type of task, when an individual faces a sequence of events they initially expect trend continuation. Only when people assume that a sequence is random might they override the default and expect trend reversal instead. In a series of experiments we found that limitation of access to cognitive resources enhances expectations of trend continuation. Our interpretation of this finding is that an expectation of trend continuation is the default for the human cognitive system and that a belief in trend reversal requires access to cognitive resources to overcome the tendency to expect trend continuation.

KEYWORDS:

• Random series
• choice reaction time
• predictions
• trend continuation
• trend reversal
• gambler's fallacy
• hot-hand fallacy

Acknowledgements

All experiments were approved by the Kozminski University Ethics Committee, and the research was conducted in accordance with APA recommendations after obtaining participants’ informed consent.

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work was supported by the National Science Centre Poland (NCN) under Grant [DEC-2012/04/A/HS6/00614].