Picture the scene.
You’re in Monaco, in Monte Carlo’s casino, you’re filthy rich (yet you have a hygiene problem?). The inside of the casino is going crazy, there’s never been a day like it before, or since.
You push through hordes of expensive people, dressed up gents and dames to see what the fuss is all about. People clamour next to a majestic roulette wheel, stacks of chips cover the table.
‘It has been black for the last 25 spins’
What do you do?
On August 18, 1913, at the casino in Monte Carlo this exact scenario happened. Gamblers had bet vast sums of money on red everytime that the run of blacks increased. They thought that with every spin, the laws of probability meant they would get paid off handosmely. People lost small fortunes, and the casino made the biggest one night haul ever by a gambling establishment (if I am not mistaken).
To answer the question – is your entire life savings on it being red? Ok, just a note?
Either way you would have just lost. Black appeared for a 26th time. Impossible? Rigged?
No. It’s the gamblers fallacy. You think you have a 50:50 chance in normal terms (but european roulette wheels also have a 0 and soemtimes a 00 to give the house the edge). Even if it was only red or black at 50:50, that means EVERY SPIN has a 50% chance of being one or the other. So despite the phenomenal and salient run of black, the chance of red being next was never more than 50% which is why so many people lost millions of francs on that fateful night.
We use a representative heuristic (rule of thumb, mental shortcut) of probabilities as a guide to future events. The human mind sees a pattern like 25 black and thinks, red is due. And for that we lose our money!