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The price of luck: paying for the hot hand of others

Published online by Cambridge University Press:  17 January 2025

Silvia Bou ,
Jordi Brandts ,
Magda Cayón  and
Pablo Guillén
Silvia Bou
Affiliation:
Department of Business, Universitat Autònoma de Barcelona, Barcelona, Spain
Jordi Brandts*
Affiliation:
Instituto de Análisis Económico (CSIC) and Barcelona GSE, Barcelona, Spain
Magda Cayón
Affiliation:
Department of Business, Universitat Autònoma de Barcelona, Barcelona, Spain
Pablo Guillén
Affiliation:
The University of Sydney, Sydney, Australia
*
e-mail: [email protected]
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Abstract

We report on the results of an experiment with a statistical choice task involving the toss of a fair coin. In our experiment, participants had to decide whether they were willing to pay a price to switch from betting on the future performance of one player to betting on that of another player. The switch was from a player who had been previously less successful in betting on five coin flips to another one who had been more successful in the same task. We conducted a treatment with the Becker–DeGroot–Marschak mechanism and one in which participants were faced with a fixed price. In both cases, participants exhibit a strong bias towards placing their bets on players with a good guessing history in the coin toss task. Participants’ behaviour is compatible with prescriptive luck beliefs, that is, the idea that luck is a somehow deterministic and personal attribute.

Keywords

Decision heuristicsCognitive biasEconomic experiments

JEL classification

C91: Laboratory, Individual Behavior
Type
Original Paper
Information
Journal of the Economic Science Association , Volume 2 , Issue 1 , May 2016 , pp. 60 - 72
Copyright
Copyright © Economic Science Association 2016

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Footnotes

Electronic supplementary material The online version of this article (doi:10.1007/s40881-016-0023-9) contains supplementary material, which is available to authorized users.

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