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Gamblers Fallacy

Gamblers Fallacy and probabilities of business success

Is the cognitive bias known as gamblers fallacy holding you back in business?

The human brain is incredible! It’s also one of the biggest obstacles keeping you from business success. The internet has literally exploded the amount of information available to us just for asking. You hit the web to look up one thing. And before you know it, with each link clicked, you’re being taken down many related (or even unrelated) paths.

As you wander the information highway, your brain is simultaneously processing thousands of subconscious ideas — whether you want it to or not. The challenge is training yourself to see the cognitive biases at work so you can make needed adjustments in your critical thinking and decision making. Otherwise, you risk making predictable errors that can potentially devastate your business and you.

We’re all prone to making judgement errors; it’s part of being human. You’ll probably make more than one today alone. Here’s one of the most common cognitive biases that negatively impacts your business.

BIAS #1: Gamblers Fallacy

This cognitive bias is one that keeps casinos rich and gamblers coming back. Probabilities are probabilities. The odds of winning do not change. Certain probabilities are always the same.

For example, the Super Bowl always starts with the coin toss. Whatever the team chooses, heads or tails, the probability of winning the toss is 50%. If you think the probabilities have changed because for the last 5 years the coin toss came up heads, you would be wrong.

Future probabilities are not altered by past events. But thinking they are is what causes gamblers to lose money and casino owners to love the business they’re in. While the odds are different for each game you play, the probability of winning is constant.

Take roulette, for example. It does not matter what the wheel landed on while you were watching it for 10 minutes before placing your bet. What matters is there are 18 reds and 38 blacks, so the probability of landing on red is 47.37% for each and every spin.

Are you gambling with your business success?

Let’s look at probabilities you’re facing right now. Your probability of building a website that makes you money is 1% and your probability of creating a successful business overall is 3%.

I’m sure you’re working very hard on your business. Most people are. Perhaps you’ve even spent money you didn’t have chasing your entrepreneurial dream. Tens of thousands do.

But you haven’t changed the probabilities of success. There are things you can do to overcome the odds. Most people aren’t doing them.

Ask yourself these 3 questions:

  1. Do you know how much of each marketing activity you must do this week to get the results you need from ideal prospects?
  2. When engaging your market, are you talking about them or is the convo all about you and your products and services?
  3. When reading sales letters for offers you can’t afford, do you tell yourself this is the one thing that will make all the difference to your probability of success?

Then make whatever changes are needed.