The perception of randomness

Psychologists have studied people's intuitive notions of randomness by two kinds of tasks: judgment tasks (e.g., "is this series like a coin?" or "which of these series is most like a coin?"), and production tasks (e.g., "produce a series like a coin"). People's notion of randomness is biased in that they see clumps or streaks in truly random series and expect more alternation, or shorter runs, than are there. Similarly, they produce series with higher than expected alternation rates. Production tasks are subject to other biases as well, resulting from various functional limitations. The subjectively ideal random sequence obeys "local representativeness"; namely, in short segments of it, it represents both the relative frequencies (e.g., for a coin, 50%-50%) and the irregularity (avoidance of runs and other patterns). The extent to which this bias is a handicap in the real world is addressed.