This is a Lexicon entry: the mechanism, when it shows up, and the countermeasure. The full correction, with real-world cases and the audit prompt, hasn't been written yet.
When it shows up
Sports commentary ("hot hand" debates), financial chart reading, cancer cluster investigations, gambling behaviour. A random sequence of coin flips will contain streaks that look meaningful. Bombing patterns in WWII London appeared clustered but matched random distribution exactly.
Failure mode
Developing elaborate theories to explain noise. Trading strategies built on spurious chart patterns. Public health scares from random geographic clustering. Policy interventions targeting phantom patterns.
Countermeasure
Before concluding a pattern is real, ask: "What would genuine randomness look like in this dataset?" Run the statistical test. Most apparent patterns in small samples are noise. Apply CL-2 (Base Rate Check).
Related traps
Also connected in the mapThe Narrative Fallacy·10 more, locked
Read next
Entry #13 of 631 in The Lexicon · see the full Lexicon