A Cold Shower for the Hot Hand Fallacy: Robust Evidence that Belief in the Hot Hand is Justified
IGIER Working Paper No. 518
47 Pages Posted: 15 Jun 2014 Last revised: 28 Aug 2019
Date Written: August 24, 2019
Abstract
The hot hand fallacy has long been considered a massive and widespread cognitive illusion with important implications in economics and finance. We develop a novel empirical strategy to correct for several fundamental limitations in the canonical study and replications, conduct an improved field experiment to test for the hot hand in its original domain (basketball shooting), and gather all extant controlled shooting data. We find strong evidence of hot hand shooting in every dataset, including on the individual level. Also, in a novel study of beliefs, we find that expert observers \emph{can} predict (out-of-sample) which shooters are hotter.
Keywords: Hot Hand Fallacy, Hot Hand Effect
JEL Classification: C12, C14, C93, D03
Suggested Citation: Suggested Citation