Experts’ Perceptions of Autocorrelation: The Hot Hand Fallacy Among Professional Basketball Players

The hot hand fallacy is the perception positive autocorrelation when none is actually present. However, when mistaken beliefs do not affect the underlying success probability, then they come at zero cost if the underlying sequence truly exhibits independence. This paper studies an environment where success probabilities are a function of beliefs: shot selection in professional basketball. Beliefs are inferred through shot conditions such as time between shots, distance, defense, location, passes and touches. I find that a majority of the players in the sample significantly changed their behavior in response to hit-streaks by taking more difficult shots, while no player responded to miss-streaks. However, controlling for difficulty, shooting ability is not related to past outcomes. A quarter of the sample suffered a significant loss in shooting efficiency as a result of their mistaken responses. The remaining players either showed no response (3/8) or did so by substituting point value for difficulty leaving efficiency unchanged (3/8). Consistent performance is linked to heightened individual economic incentives.