Browse Definitions :
Definition

law of averages

The law of averages is an erroneous generalization of the law of large numbers, which states that the frequencies of events with the same likelihood of occurrence even out, given enough trials or instances. The law of averages is usually mentioned in reference to situations without enough outcomes to bring the law of large numbers into effect.  

A common example of how the law of averages can mislead involves the tossing of a fair coin (a coin equally likely to come up heads or tails on any given toss). If someone tosses a fair coin and gets several heads in a row, that person might think that the next toss is more likely to come up tails than heads in order to "even things out." But the true probabilities of the two outcomes are still equal for the next coin toss and any coin toss that might follow. Past results have no effect whatsoever: Each toss is an independent event.

Another example of the law of averages involves batting averages in baseball. If a player has a batting average of .250, then he can be expected to get a hit on one out of every four at-bats (not counting bases on balls) in the long term. However, as anyone who follows baseball knows, hitters' fortunes run in "streaks" and "slumps" that can last for days or even weeks. During a "streak," a batter might get a hit in four out of 10 at-bats, and during "slumps" he might get a hit in only one out of 10 at-bats. If people invoke the law of averages when the hitter is "slumping," they will say that "he is due for a hit," suggesting on each and every at-bat that his chances are better than one in four because things "have to even out." However, according to the strict law of large numbers, no such supposition can be made.

The law of large numbers is often confused with the law of averages, and many texts use the two terms interchangeably. However, the law of averages, strictly defined, is not a law at all, but a logic error that is sometimes referred to as the gambler’s fallacy.

This was last updated in December 2012

Continue Reading About law of averages

Networking
  • Network as a Service (NaaS)

    Network as a service, or NaaS, is a business model for delivering enterprise WAN services virtually on a subscription basis.

  • network configuration management (NCM)

    Network configuration management is the process of organizing and maintaining information about all of the components in a ...

  • presentation layer

    The presentation layer resides at Layer 6 of the Open Systems Interconnection (OSI) communications model and ensures that ...

Security
  • backdoor (computing)

    A backdoor attack is a means to access a computer system or encrypted data that bypasses the system's customary security ...

  • Heartbleed

    Heartbleed was a vulnerability in some implementations of OpenSSL, an open source cryptographic library.

  • What is risk management and why is it important?

    Risk management is the process of identifying, assessing and controlling threats to an organization's capital and earnings.

CIO
HRSoftware
  • team collaboration

    Team collaboration is a communication and project management approach that emphasizes teamwork, innovative thinking and equal ...

  • employee self-service (ESS)

    Employee self-service (ESS) is a widely used human resources technology that enables employees to perform many job-related ...

  • learning experience platform (LXP)

    A learning experience platform (LXP) is an AI-driven peer learning experience platform delivered using software as a service (...

Customer Experience
  • headless commerce (headless e-commerce)

    Headless commerce, also called headless e-commerce, is a platform architecture that decouples the front end of an e-commerce ...

  • chief customer officer (CCO)

    A chief customer officer, or customer experience officer, is responsible for customer research, communicating with company ...

  • relationship marketing

    Relationship marketing is a facet of customer relationship management (CRM) that focuses on customer loyalty and long-term ...

Close