People overestimate their influence over outcomes that are largely or wholly chance.
Langer's 1975 studies found people paid more for lottery tickets they had chosen themselves, and threw dice harder for high numbers. Both are chance, and both feel controllable.
In practice
- A trader who picks their own positions is more confident than one given the same portfolio to manage.
- A driver feels safer than a passenger on the identical journey, and the road does not know who is holding the wheel.
- Further reading
- Wikipedia
- Subject
- Decision-making & Reasoning
- Essay
- The catalogue of predictable errors