Illusion of Control

Investing in stocks is beyond picking well performing stocks; it is more on how to decide which asset to acquire, hold or sell and when to do so. Investors tends not to be logical when making decisions; they respond to numerous psychological biorhythms, which is related to overconfidence, fear, excitement, experience and others. These psychological biases distort investors decisions, alters investment goal and cause market volatility. Behavioral finance field developed this hypothetical theory in response to this argument which could not be clarified by traditional finance theory. It is on this note that the need to investigate these biases arose. The paper generated its data through 26 dispatched items on the questionnaire then employed reliability test and correlation analysis as estimation technique on a sample of 121 respondents in Lagos Nigeria. The results revealed that individual investor decisions were significantly correlated to representative bias, cognitive bias and herd ...

Scholars use the theoretical lens of bias to research various behavioral phenomena in
entrepreneurship. We assess this body of research, focusing on definitional issues and
relationships. Furthermore, we discuss how the study of bias in entrepreneurship can be
advanced, given the new development in related fields such as cognitive sciences. The
assessments and discussions help reveal as well as address tensions in the literature,
identify numerous research opportunities that may not be obvious by looking at previous
work individually, and contribute to how the theory of bias can further help to understand
entrepreneurship.

Investing in stocks is beyond picking well performing stocks; it is more on how to decide which asset to acquire, hold or sell and when to do so. Investors tends not to be logical when making decisions; they respond to numerous psychological biorhythms, which is related to overconfidence, fear, excitement, experience and others. These psychological biases distort investors decisions, alters investment goal and cause market volatility. Behavioral finance field developed this hypothetical theory in response to this argument which could not be clarified by traditional finance theory. It is on this note that the need to investigate these biases arose. The paper generated its data through 26 dispatched items on the questionnaire then employed reliability test and correlation analysis as estimation technique on a sample of 121 respondents in Lagos Nigeria. The results revealed that individual investor decisions were significantly correlated to representative bias, cognitive bias and herd instinct bias. The statistically significant correlations indicate that these dimensions of Behavioural biases influence investor's decision even though it is weak. Nevertheless, motive on investment return wasn't significantly related to loss aversion bias, self-attribution bias, regret aversion bias, over optimism bias, Illusion of control bias, hindsight bias. The paper suggests that investors should seek the services of professional investors in the managing their portfolios to lessen the influence of behavioral biases.

There has been a great deal of interest in the concept of luck in the recent psychological and philosophical literature. In philosophy, this interest has tended to focus not upon luck simpliciter but rather upon the role that luck plays in ethical and epistemological debates concerning (respectively) moral and epistemic luck. In psychology, in contrast, a number of studies have explicitly examined our everyday conceptions of luck and the manner in which these conceptions influence our lives. This article surveys both the recent psychological and philosophical literature on this topic and argues that (to different degrees) the work of both disciplines in this area has been hampered by a failure to be clearer about what luck involves. Accordingly, this article offers a specification of what is core to the notion of luck and highlights how this analysis can aid further research in this area by both psychologists and philosophers.

Anger has been shown to be a motivating factor in aggression and it is widely accepted that driving anger may lead to aggressive driving. However, the link between anger and aggressive driving is likely to be mediated by drivers’ pre-existing cognitive biases and the subsequent situational evaluations made. This study investigated the extent to which optimism bias, illusion of control beliefs and driver anger predict self-reported hostile driving behaviours. A total of 220 licensed drivers (106 men; 114 women) completed a self-report questionnaire measuring trait driving anger, optimism bias, illusion of control and driving behaviour. Structural Equation Modelling showed that trait driving anger and illusion of control beliefs account for 37% of the variance in hostile driving behaviour scores. Optimism biases were unrelated to hostile driving behaviours. Thus, driving anger propensities and feelings of control over the situation, but not a general tendency to underestimate the likelihood of adverse outcomes, predict aggressive driving.

Keywords: Driving anger, Cognitive bias, Illusion of control, Aggressive driving, Optimism bias

It is well known that certain variables can bias judgements about the perceived contingency between an action and an outcome, making them depart from the normative predictions. For instance, previous studies have proven that the activity level or probability of responding, P(R), is a crucial variable that can affect these judgements in objectively noncontingent situations. A possible account for the P(R) effect is based on the differential exposure to actual contingencies during the training phase, which is in turn presumably produced by individual differences in participants' P(R). The current two experiments replicate the P(R) effect in a free-response paradigm, and show that participants' judgements are better predicted by P(R) than by the actual contingency to which they expose themselves. Besides, both experiments converge with previous empirical data, showing a persistent bias that does not vanish as training proceeds. These findings contrast with the preasymptotic and transitory effect predicted by several theoretical models.

Depressive realism consists of the lower personal control over uncontrollable events perceived by depressed as compared to nondepressed individuals. In this article, we propose that the realism of depressed individuals is caused not by an increased accuracy in perception, but by their more comprehensive exposure to the actual environmental contingencies, which in turn is due to their more pas-sive pattern of responding. To test this hypothesis, dysphoric and nondysphoric participants were exposed to an uncontrollable task and both their probability of responding and their judgment of control were assessed. As was expected, higher levels of depression correlated negatively with probability of responding and with the illusion of control. Implications for a therapy of depression are discussed.

Cognitive grounds of culture: basic categories. What is meant by 'projective realities'. Milieu. Projective realities as limited and situational ones. Illusion of control and identity. Inference systems and ontological categories.  Counter-intuitivity.

The illusion of control can be defined as the erroneous belief that one’s actions cause a specific outcome, whereas sense of agency refers to the subjective feeling of authorship over one’s actions. In the present study we investigated the development of illusory control and sense of agency. A novel card-guessing game was developed in which 7- to-12-year old children (Study 1) and adults (Study 2) were required to select a card, and we manipulated the congruence of the outcome with their initial choice (i.e. congruent or incongruent) and the valence of the outcome that was presented (i.e. positive or negative). We found that illusory control and the self-attribution bias (i.e. the bias to attribute positive outcomes to oneself) in the card guessing game decreased, as children get older. In contrast, for both children and adults sense of agency in the task was similarly affected by outcome congruency, suggesting that the ability to relate predicted to observed action outcomes reflects a basic mechanism that helps people to sustain a sense of agency. Thus, while the illusion of control decreases as we get older, the experience of agency as a function of outcome congruency seems to be more stable across development.

When people try to obtain a desired event and this outcome occurs independently of their behavior, they often think that they are controlling its occurrence. This is known as the illusion of control, and it is the basis for most superstitions and pseudosciences. However, most experiments demonstrating this effect had been conducted many years ago and almost always in the controlled environment of the psychology laboratory and with psychology students as subjects. Here, we explore the generality of this effect and show that it is still today a robust phenomenon that can be observed even in the context of a very simple computer program that users try to control (and believe that they are controlling) over the Internet. Understanding how robust and general this effect is, is a first step towards eradicating irrational and pseudoscientific thinking.

Several classic studies have concluded that the accuracy of identifying uncontrollable situations depends heavily on depressive mood. Nondepressed participants tend to exhibit an optimistic illusion of control, whereas depressed participants tend to better detect a lack of control. Recently, we suggested that the different activity levels (measured as the probability of responding during a contingency learning task) exhibited by depressed and nondepressed individuals is partly responsible for this effect. The two studies presented in this paper provide further support for this mediational hypothesis, in which mood is the distal cause of the illusion of control operating through activity level, the proximal cause. In Study 1, the probability of responding, P(R), was found to be a mediator variable between the depressive symptoms and the judgments of control. In Study 2, we intervened directly on the mediator variable: The P(R) for both depressed and nondepressed participants was mani...

Two experiments examined the relationships between the knowledge that another person has won in a gamble, the illusion of control and risk taking. Participants played a computer-simulated French roulette game individually. Before playing, some participants learnt that another person won a large amount of money. Results from a first experiment (n = 24) validated a causal model where the knowledge of another person’s win increased the illusion of control, measured with betting times, expectancy and self-reports on scales, which in turn encourages risk taking. In the second experiment (n = 36), some participants were told the previous player acknowledged the win to be fortuitous. The suppression of the belief that the previous winner had himself exerted control over the outcome resulted in lower rates of risk-taking behaviors. This suggests that it was not the knowledge of another person’s win in itself that increased risk taking, but rather, the belief that the other person had some control over the gamble’s outcome. Theoretical implications for the study of social mechanisms involved in gambling behavior are discussed.

Researchers have warned that causal illusions are at the root of many superstitious beliefs and fuel many people's faith in pseudoscience, thus generating significant suffering in modern society. Therefore, it is critical that we understand the mechanisms by which these illusions develop and persist. A vast amount of research in psychology has investigated these mechanisms, but little work has been done on the extent to which it is possible to debias individuals against causal illusions. We present an intervention in which a sample of adolescents was introduced to the concept of experimental control, focusing on the need to consider the base rate of the outcome variable in order to determine if a causal relationship exists. The effectiveness of the intervention was measured using a standard contingency learning task that involved fake medicines that typically produce causal illusions. Half of the participants performed the contingency learning task before participating in the educational intervention (the control group), and the other half performed the task after they had completed the intervention (the experimental group). The participants in the experimental group made more realistic causal judgments than did those in the control group, which served as a baseline. To the best of our knowledge, this is the first evidence-based educational intervention that could be easily implemented to reduce causal illusions and the many problems associated with them, such as superstitions and belief in pseudoscience.

Misperceptions of causality are at the heart of superstitious thinking and pseudoscience. The main goal of the present work is to show how our knowledge about the mechanisms involved in causal induction can be used to hinder the development of these beliefs. Available evidence shows that people sometimes perceive causal relationships that do not really exist. We suggest that this might be partly due to their failing to take into account alternative factors that might be playing an important causal role. The present experiment shows that providing accurate and difficult-to-ignore information about other candidate causes can be a good strategy for reducing misattributions of causality, such as illusions of control.

The tempting fate effect is that the probability of a fateful outcome is deemed higher following an action that ``tempts'' the outcome than in the absence of such an action. In this paper we evaluate the hypothesis that the effect is due to an illusion of control induced by a causal framing of the situation. Causal frames require that the action make a difference to an outcome and that the action precedes the outcome. If an illusion of control modulates the reluctance to tempt fate, then actions that make a difference to well-being and that occur prior to the outcome should tempt fate most strongly. In Experiments 1--3 we varied whether the action makes a difference and the temporal order of action and outcome. In Experiment 4 we tested whether an action can tempt fate if all outcomes are negative. The results of all four experiments supported our hypothesis that the tempting fate effect depends on a causal construal that gives rise to a false sense of control.

In many countries, betting in sports is highly regulated. In Germany, however, there are current debates whether regulation should be loosened. A crucial part of the argument is that sport bets could be qualified as ‘games of skill’ that are considered to be less dangerous by German Law than ‘games of chance’, and are thus assumed to need less regulation. We explore this hypothesis in three incentivized online studies on soccer betting (N=214) and provide evidence against two crucial parts of this argument. First, we show that there are no overall effects of skill on accuracy in soccer bets and monetary earnings do not increase with skill. Hence, soccer betting cannot be considered a game of skill. Second, we show that soccer betting induces strong overconfidence and illusion of control, particularly for people who assume they have high skill, and that these biases lead to increased betting. Cognitive biases that might cause financial harm for bettors or
even lead to problematic or pathological gambling behavior are even stronger for soccer bets compared to bets on the outcome of lotteries. Concerning the main aims of legal regulation for gambling in German law, our results strongly speak for regulation of soccer bets.