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Regression to the mean is not the gambler's fallacy

The best-performing fund this year tends to underperform its own record next year, even if nothing about it changed. A gambler on a hot streak, by contrast, is not "due" to lose.

Explain regression to the mean, why it is a real statistical effect, and how it differs from the gambler's fallacy.

Your answer

This one is open-ended. Work it through, then check your reasoning against the full solution.

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