What is the Clustering Illusion?

In the world of psychology, there are dozens of cognitive biases which can muddy up clear thinking.  These biases often act on us on an unconscious basis.  We do not notice them at work, but they distort our conclusions.  When betting on sports, those biases can cause you to make poor betting decisions which cost you money.  One such bias is known as the “clustering illusion.”

What is the clustering illusion?  This is a tendency to ascribe erroneous significance to clusters or streaks of data in small sample sizes.  This happens because as human beings, we expect there to be less variability than there often is. 

In fact, this actually relates directly to sports in terms of something known as the “hot-hand phenomenon,” or “hot-hand fallacy.”

“Hot hand” is the belief that someone who has just experienced success with a random event has an increased likelihood of experiencing success with future tries.  Usually this is connected to shooting streaks of hoops in basketball. 

There is actually quite a bit of debate surrounding hot hand.  Some studies have indicated that hot hand is indeed a fallacy, while others have indicated that it may actually exist. 

Those who believe hot hand does not exist consider it an example of confirmation bias or the clustering illusion.  Those who believe hot hand does exist point out that skill is involved in sport and that a player’s own self perception that they are on a winning streak may assist them at further wins.

Unfortunately, because of the conflicting data, it is impossible to say whether hot hand exists in basketball and other sports right now or not.  But it does illustrate the complexity of the considerations associated with the clustering illusion for sports punters.

One thing which may help is to remember that the clustering illusion happens specifically when you are examining small sample sizes.  If you spot a pattern across a larger data set, it is far more likely that the pattern is solid.  There is more data in the set, which means that there is more strength to the pattern.

You will need to conduct your own testing and analysis to decide what to do with so-called “streaks.”  If you do decide to account for them when you are handicapping games, do so with caution.  Recognise that the clustering illusion does exist, whether it accounts for all cases of hot hand or not—and it may sometimes throw off your predictions.

Learn about other factors that can affect your judgment when betting on UK betting websites:

• Confirmation bias
• Focusing effect 
• Dunning-Kruger effect and 
• The Green Lumber Fallacy.