Tonight, in one of the most anticipated matchups in the March Madness Sweet 16, UCLA’s star point guard Lonzo Ball will go head-to-head against Kentucky’s De’Aaron Fox. Both Ball and Fox are considered stellar players and are projected to be top-10 picks in the NBA draft.
Current predictions seem to favor UCLA’s Bruins in Friday’s NCAA game against the Kentucky Wildcats, with Fortune’s sister publication Sports Illustrated forecasting the Bruins will win, 98 points to 90. After all, UCLA prevailed when the teams last met in a thrilling game in December.
And point guard Ball’s track record is an enticing bet for sports fans: Besides scoring an average 14.7 points per game, Ball has also assisted another 18.1 points each match, according to SI.
But before fans get too caught up in Ball’s ability to make his next basket, they should consider an economic theory that has a bearing on whether the sport’s most talented shooters can sustain the momentum when they’re on a roll.
In fact, there’s a long history of academics who, though perhaps not athletically inclined, have applied their brainpower to study basketball instead. And there’s one debate specific to basketball that’s widely studied and still rather controversial: It’s called the hot hand fallacy.
It’s a seductive psychological phenomenon that might already have overtaken you during March Madness while watching a star player score a lot of points. Basketball is thought to be a “streaky” game, with fans or commentators often suspecting that player has entered into a scoring streak. He has a “hot hand,” so to speak, which only naturally, fans expect to continue when he makes his next shot.
The question economists have long tried to solve is: Does the “hot hand” phenomenon really exist, or is it just an illusion?
Behavioral economists, psychologists and statisticians have for years said that, in reality, the odds of a player making his next shot are not much different than the odds of flipping heads or tails in a coin toss. The seminal study on the subject was published in 1985 by Thomas Gilovich, who now is a well-known social psychologist and behavioral economist at Cornell University. He and his colleagues looked at data from the Philadelphia 76ers, the Boston Celtics, the New Jersey Nets and the New York Knicks, as well as Cornell’s basketball teams.
The results forever changed the science of decision-making. They could find no evidence of players being either “hot” or “cold.” Rather, scoring seemed to be random.
But for some reason, psychologically, players, coaches and fans still fall into the cognitive trap of believing a winning streak will continue—the same way investors buy into the stock market when prices are surging, thinking they will just keep going up. The human mind often seeks out patterns when there aren’t any, and this can cloud decision-making.
In fact, coaches and players may even make poor choices at times by passing the ball to someone they think is “hot,” even though that player is probably guarded more heavily than another player thought to be “cold.”
When it comes to decision-making in a basketball game, little harm is done (other than, perhaps, for betters who lose money by wagering on the wrong team or player). But when this same unconscious bias seeps into bigger decisions—for example, when investors pour more money into a hot stock, or when managers mistakenly try to make sense out of randomness – there can be bigger consequences. In fact, the hot-hand fallacy has become a staple lesson in some business school classes for this very reason. The lesson is: Past successes don’t predict future success.
Still, that hasn’t stopped people from trying to prove that hot streaks truly can be a sign of continuing momentum and future wins. Some basketball fans are convinced that the “hot hand” really does exist, and many economists have revisited the study over the last 30 years, trying to debunk its conclusions.
No one even came close to doing so, however, until 2015, when economists Joshua Miller and Adam Sanjurjo published a paper that—as the Wall Street Journal has said—flipped the “hot hand” debate on it’s head.
The economists suggest a minor statistical error was made in Gilovich’s original research. Once they accounted for this subtle bias and tested their new methodology on more years of data, they found that once players made three shots in a row, their odds of hitting the next shot improved by about six percentage points.
That’s huge in basketball, but more importantly, it has implications for decision-makers in other contexts as well.
Even Gilovich agrees with parts of that study. “What they discovered is correct,” he told the WSJ at the time. The question that remains now, he said, is whether the real effect is “so small that the original conclusion stands or needs to be modified.”
Can basketball players really be on fire, so to speak? The jury is still out, but Ball and other high-scoring players will have a chance to demonstrate their enduring star power during the rest of NCAA March Madness.
The UCLA Bruins play the Kentucky Wildcats at 9:30 p.m. ET Friday on CBS.