Exchangeability and the law of maturity

Fernando Bonassi (), Rafael Stern (), Cláudia Peixoto () and Sergio Wechsler ()

Theory and Decision, 2015, vol. 78, issue 4, 603-615

Abstract: The law of maturity is the belief that less-observed events are becoming mature and, therefore, more likely to occur in the future. Previous studies have shown that the assumption of infinite exchangeability contradicts the law of maturity. In particular, it has been shown that infinite exchangeability contradicts probabilistic descriptions of the law of maturity such as the gambler’s belief and the belief in maturity. We show that the weaker assumption of finite exchangeability is compatible with both the gambler’s belief and belief in maturity. We provide sufficient conditions under which these beliefs hold under finite exchangeability. These conditions are illustrated with commonly used parametric models. Copyright Springer Science+Business Media New York 2015

Keywords: Law of maturity; Exchangeability; Gambler’s fallacy; Belief in maturity; Bayesian statistics; 0–1 Process (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1007/s11238-014-9441-4

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