However, recent papers (an example is found here) suggest this may not be a “fallacy” after controlling for other factors (here is the WSJ interpretation of the paper). Here is another article on the hot hand in baseball.
A new paper by Miller and Sanjurjo, titled: “Is It a Fallacy to Believe in the Hot Hand in the NBA Three-Point Contest?” suggests the hot hand exists in the 3-point contest. The Abstract is listed below:
The hot hand fallacy refers to a belief in the atypical clustering of successes in sequential outcomes when there is none. It has long been considered a massive and widespread cognitive illusion with important implications in economics and Finance. The strongest evidence in support of the fallacy remains that from the canonical domain of basketball, where the widespread belief in the existence of hot hand shooting, among expert players and coaches, has been found to have no evidential basis (Gilovich, Vallone, and Tversky 1985). A prominent exhibit of the fallacy is Koehler and Conley (2003)’s study of the NBA Three-Point Contest (1994-1997), a setting which is viewed as ideal for a test of the hot hand (Thaler and Sunstein 2008). In this setting, despite the well-known beliefs of players, coaches, and fans alike, Koehler and Conley and no evidence of hot hand shooting. In the present study, we collect 29 years of shooting data from television broadcasts of the NBA Three-Point Contest (1986-2015), and apply a statistical approach developed in Miller and Sanjurjo (2014), which is more powered, contains an improved set of statistical measures, and corrects for a substantial downward bias in previous estimates of the hot hand effect. In contrast with previous studies, but consistent with Miller and Sanjurjo (2014)’s recent finding of substantial hot hand shooting in all previous controlled shooting studies (including that from the original study of Gilovich, Vallone, and Tversky), we and substantial evidence of hot hand shooting in the NBA Three-Point Contest. This leaves little doubt that the hot hand not only exists, but actually occurs regularly. Thus, belief in the hot hand, in principle, is not a fallacy.
Does the hot hand exist? More and more research papers show that after controlling for factors, the “hot hand” may exist.
Anyway, since the Warriors are in the NBA finals, here is a great video of Klay Thompson scoring 37 points in one quarter — did he have the “hot hand?”
Jack Vogel, Ph.D., conducts research in empirical asset pricing and behavioral finance, and is a co-author of DIY FINANCIAL ADVISOR: A Simple Solution to Build and Protect Your Wealth. His dissertation investigates how behavioral biases affect the value anomaly. His academic background includes experience as an instructor and research assistant at Drexel University in both the Finance and Mathematics departments, as well as a Finance instructor at Villanova University. Dr. Vogel is currently a Managing Member of Alpha Architect, LLC, an SEC-Registered Investment Advisor, where he heads the research department and serves as the Chief Financial Officer. He has a PhD in Finance and a MS in Mathematics from Drexel University, and graduated summa cum laude with a BS in Mathematics and Education from The University of Scranton.
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