(upbeat music) (coin spinning) Kelly Shue: So let’s say you’re flipping a coin with someone, and the first time you flip it’s heads. The next time you flip it’s heads again. You keep on flipping for 10 coin flips in a row. It keeps on landing heads. At some point, you’re going to start expecting that the next coin flip is now more likely to be tails, and that’s what we call the gambler’s fallacy. In reality, when you’re flipping coins, the probability of that next coin flip landing heads or tails is always exactly 50 percent. It doesn’t change even if you’ve had a long streak of heads.
We look at how the gambler’s fallacy can bias and lead to mistakes in everyday decision-making. For example, we show in the setting of loan officers who are screening loan files that they are more likely to reject the current loan file that they’re looking at if they just granted a loan to the previous applicant. We would estimate that 5 percent of loan decisions would have gone the other way, if not for this type of bias.
Most of the previous research on the gambler’s fallacy has focused on bringing people into a laboratory setting and studying their behavior within that experimental setting. Our paper instead looks at real data on people making decisions as part of their everyday jobs. So we’re looking at sequences of real asylum decisions made on refugee applicants. Now, refugees, once they’re in the US, can petition for asylum to stay in the US, so that they’re not deported and threatened with persecution back in their home countries. What we find is that asylum judges in the US are more likely to grant asylum to the current refugee applicant if they just denied asylum to the previous applicant. And similarly, if they just rejected asylum for the previous applicant, they’re more likely to grant asylum to the current applicant.
This is a serious problem because we want to grant asylum to the most deserving of applicants, because each refugee applicant’s life is at stake with this type of decision. So whether you’re flipping a coin, or you’re a judge deciding whether or not to grant asylum, hopefully by becoming aware of this type of bias, your decisions will no longer be swayed by previous outcomes. (crescendo music) (coin spinning, then stops)
