What is it about?
We test for and find evidence of a ``hot hand” in Major League Baseball. Our results are in notable contrast to the majority of the hot hand literature, which has found little to no evidence for a hot hand, often employing basketball data. We argue that this difference is attributable to defensive responses: basketball presents an opportunity for defenses to respond to streaky shooting and equate shooting probabilities whereas baseball does not.
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Why is it important?
The “hot hand fallacy” in sports is frequently cited in behavioral economics and finance as an example of a widespread cognitive mistake. Overall, our results suggest that the hot hand exists and the hot-hand fallacy can largely attributed to endogenous responses rather than cognitive mistakes.
Perspectives
Sports fans, coaches, broadcasters and players alike are perpetually referring to streakiness in sports as a real phenomenon. Yet, there is surprisingly little empirical evidence in favor of it. In this paper, we show that a hot hand in baseball does in fact exist and explain why previous papers have failed to identify it.
Professor Brett Green
University of California Berkeley
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This page is a summary of: The Hot-Hand Fallacy: Cognitive Mistakes or Equilibrium Adjustments? Evidence from Major League Baseball, Management Science, September 2017, INFORMS,
DOI: 10.1287/mnsc.2017.2804.
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