|Overview: Win-Stay, Lose-Switch|
A tendency for opponents to switch choices after a loss and continue with a choice that has won. This can generate irrational or predictable choices.
What is Win Stay, Lose Switch?
John Spacey, updated on November 19, 2016
Win-stay, lose-switch is a commonly observed strategy whereby people are more likely to switch choices after losing than winning. In some cases, this is irrational. An investor may keep buying a stock that is winning and sell a stock that is losing, even if the valuation of the losing position suggests a possible rebound and the winning position is obviously overvalued. In some cases, win-stay, lose-switch can be used to anticipate an opponent's behavior. A competitor that fails at their first attempt into a market may retract completely. Any taste of success may drive them forward. In choice driven games such as rock, paper, scissors it is common for a player to repeat their choice after winning and change it after losing.
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