Quote from: odolvlobo on March 07, 2015, 06:00:28 PM

Quote from: goose20 on March 07, 2015, 12:29:32 PM

This is interesting. I have done some reading up on 'reversion to the mean' as I've never heard of the term.

To me, my thinking was along the lines to Bit_Happy. That is, if there is an average x, and for years the number produced is < x, then there needs to be a period where for years the number produced has to be > x, in order for that average to stand.

Am i understanding the fallacy of the reversion to the mean correctly - the above is not necessary the case?

Your statement is correct, but if the results have been below average, then the average must change, and not the mechanism behind the average.

Here's an example of the "reversion to the mean" fallacy in action:

You flip a coin 100 times, and you get 40 heads and 60 tails. You expected the number heads to be 50%, but you got 40%. Next, you are going to flip the coin another 100 times.

You expect 50 heads for the next 100, so you must expect 90 heads for the total 200, that is 45% of 200 flips, not 50%. If you expect 400 of another 800 flips to be heads, then you expect the total number of heads to be 490, and the average for the 1000 flips to be 49%, not 50%. Eventually with enough flips, the average will approach the expected 50%, but not because something "reverted".

Now, let's assume that you expect the total number of heads after 200 flips to "revert to the mean" of 50%. That means that you expect 60 heads out of the next 100 flips, and not 50. In order for that to happen, then something about coin flipping must change. Otherwise, you must expect 50 heads and not 60.

Damn you've explained that well. Thanks mate.