Abstract

http://ssrn.com/abstract=883324
 
 

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Hot Hands in Basketball and Equilibrium


Gil Aharoni


University of Melbourne; Financial Research Network (FIRN)

Oded Sarig


Interdisciplinary Center (IDC) Herzliyah - Arison School of Business; University of Pennsylvania - The Wharton School

August 1, 2008

EFA 2006 Zurich Meetings

Abstract:     
Past literature suggests that success rates in professional basketball are independent of past performance and has been interpreted as evidence that the commonly-shared belief in Hot Hands (HH) is a cognitive illusion. This is often cited as evidence of biased decision-making even when financial stakes are high. We argue that this interpretation ignores changes in both teams behavior after the detection of an HH player. We derive testable hypotheses that differentiate between HH as a real phenomenon and a cognitive illusion. Analyzing an entire NBA season, our results are consistent with HH being a real phenomenon.

Number of Pages in PDF File: 58

Keywords: hot hand, basketball, equilibrium

JEL Classification: D01, D59, D79

working papers series


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Date posted: February 23, 2006 ; Last revised: September 9, 2008

Suggested Citation

Aharoni, Gil and Sarig, Oded, Hot Hands in Basketball and Equilibrium (August 1, 2008). EFA 2006 Zurich Meetings. Available at SSRN: http://ssrn.com/abstract=883324 or http://dx.doi.org/10.2139/ssrn.883324

Contact Information

Gil Aharoni
University of Melbourne ( email )
Melbourne, Victoria 3010
Australia
Financial Research Network (FIRN)
C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia
HOME PAGE: http://www.firn.org.au

Oded H. Sarig (Contact Author)
Interdisciplinary Center (IDC) Herzliyah - Arison School of Business ( email )
P.O. Box 167
Herzliya, 46150
Israel
University of Pennsylvania - The Wharton School ( email )
3641 Locust Walk
Philadelphia, PA 19104-6365
United States
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