The Law of Small Numbers

We draw overly confident conclusions from small samples — treating a handful of observations as reliably representative of a larger population.

• A fund manager who outperforms for three years is called a genius — ignoring that in a large population of managers, many will outperform for three years by pure chance.
• A town reports a cancer cluster — investigation often reveals a sample too small to distinguish a real pattern from random variation.
• After interviewing four candidates from one university who all performed well, a recruiter concludes that university produces the best graduates.