Can your decisions fall victim to the illusion of control?

Control can sometimes be an illusion. But sometimes you need illusion to gain control. Fantasy is an easy way to give meaning to the world, to cloak our harsh reality with escapist comfort.
Elliot Alderson, Mr. Robot

From the Steering Bird team, online advisers in business direction, management and finance, and Tu Mejor Tú, metas claras para el éxito, we present you a new article written together. This time we will refer to the illusion of control, magical thinking and superstitions, and how they affect our decisions.

Introduction

Behavior is shaped and maintained by its consequences.
B. F. Skinner

Let’s recall a short story that we included in our article Skill vs. Luck (part 1) and that appeared in the L.A. Times newspaper on December 30, 1977. In Spain, in the mid-1970s, a man won the Special Christmas Draw of Lotería Nacional (known as “El Gordo”) with a ticket ending in the number 48. When a journalist asked why he looked for that ticket and bought it, the man pointed out “I dreamed of the number seven for seven straight nights. And 7 times 7 is 48”.

This anecdote also helps us to begin to talk about how we attribute some power over our decisions to objects and actions. An attribute that we know is illogical and that, statistically, does not change the chances of success.

Have you ever had the feeling that a stroke of luck is coming? If you are like most people, you probably are. Many of the texts that fill the self-help shelves point in this direction: think or want something and this will magically come true. A matter, at least, debatable.

The illusion of control

What we have learned to look for in a situation determines mostly what we see.
Ellen J. Langer

Now you can imagine that people are capable of making important decisions about ideas that lack logic, which we do not recognize. This is more common than you can think. Does this sound strange? Now we will present you with two situations:

  1. You have to bet on the toss of a perfectly balanced coin. It’s very simple, just pick heads or tails… would you accept the bet before tossing it into the air? Probably yes, would you accept the bet when the coin has already been tossed and its result remains hidden? Record your answer.
  2. Now, think you have a lottery ticket that cost you Eur 10. How much money would you demand to part with the lottery ticket? Record your answer.

These experiments were carried out by psychologist Ellen J. Langer in the study The Illusion of control” (1975) published in the Journal of Personality and Social Psychology. Langer showed that:

  1. People are more likely to bet on a coin that has not yet been tossed.
  2. Most people are willing to sell the lottery ticket, but for four times the value if they had chosen the number.

Langer (1975) defines the illusion of control as “an expectancy of a personal success probability inappropriately higher than the objective probability would warrant.” From this study, we can extract something curious: people believe that they have some magical power over the currency that has not been released or on the probability of winning the lottery if they have chosen the number. Let’s not forget that the probability of winning the lottery tends to zero.

Do you have any superstitions?

When you believe in things
That you don’t understand,
Then you suffer,
Superstition aint the way.

Stevie Wonder

In accordance with what we have indicated so far, we ask you: do you have any superstitions? Do you think it is useful to you? Let us now look at a famous experiment in this regard.

In 1948, the psychologist Burrhus Frederic Skinner, published the study “Superstition in the pigeon” in Journal of Experimental Psychology. He put some hungry pigeons into a chamber, now called Skinner’s Box, where they received food at regular intervals, independent of the response they made. After a while, the pigeons began to show strange behaviors, generating rituals for the food dispenser to deliver food to them. Some spun, others hit their heads, etc. Each pigeon generated its own ritual, believing that this ritual influenced the delivery of food. This behavior was called superstition. This experiment shows how impressively easy it is to create rituals and beliefs.

There are many discussions about this experiment and its variations. Some authors indicate that in the same way that pigeons created rituals, humans generate religions; but here this is not our cup of tea.

We are going to mention something curious, which the journalist Nancy Jo Sales indicates in the documentary “Swiped: Hooking Up in the Digital Age” (2018). According to Sales, the social network Tinder would have its origin in this experiment: “It is as if the pigeon became a player, because when it pecks and gets food, it gets bored, so it pecks and pecks, it does not know when it will get the food. It may succeed, It may not. It just wants to play the game”. To think about it.

Superstition appears when we connect at random, in a cause and effect relationship, some elements of a ritual and some results that seem favorable to us. Superstition has no effect on the result. Don’t be like the pigeons in Skinner’s Box.

We will illustrate the latter from a point of view that allows a simpler analysis. Do you really think that by wearing Rafael Nadal‘s shoes to play tennis you will play as well as him? The same goes for LeBron James or Cristiano Ronaldo shoes. They won’t improve your odds and nothing will change based on the outcome, right?

So, we are sorry to tell you that wearing Rafa’s shoes will not make you play better tennis, although they can make you look good on the court and in the club house. We insist that your chances of winning will not change.

How does it affect our finances or economy?

It amazes me how people are often more willing to act based on little or no data than to use data that is a challenge to assemble.
Robert Shiller

So far, we have talked about a coin tossed in the air, a lottery ticket and the behavior of hungry pigeons. You may be thinking that this has nothing to do with money, your monthly income or expenses, or with the future of your business, but its effects extend beyond what we could imagine.

Regarding finances, Robert Shiller points out in “Irrational Exuberance” (2000) that “when we speak of people’s intuition about the likelihood that investments will do well or poorly and their own decisions to invest, we are speaking of their innermost thoughts—thoughts that they do not have to explain or justify to others.”

This is associated with what in psychology is called magical thinking or quasi-magical thinking, which occurs when people have the feeling that certain things or actions will bring them good luck, even when from the logical point of view, they know that such acts have no effect about people’s fortune

Does it seem strange to you? Think about the superstitions or rituals of some athletes before competing. Do they really affect performance? Is there a logical cause-and-effect relationship between rituals and results? Certainly not. The odds of winning at the casino do not improve when you blow the dice.

Returning to the relationship that Shiller (2000) establishes on finances, the illusion of control and magical thinking, we observe the same pattern in the process of budgeting, forecasting, project planning, investment schemes and savings and even your routine expenses.

For example, the last forecast or budget you have made, do you think it will be accurate because of its logical components or simply because you want it to be accurate? When making it, you may have appealed to your intuition, leaving more room for your luck, probably because this has been useful in the past. But we are in 2020, a year marked by the coronavirus crisis, which has changed most of the parameters of previous years. All this, beyond the relationship between skill vs luck.

Synthesis

You can’t convince a believer of anything; for their belief is not based on evidence, it’s based on a deep seated need to believe.
Carl Sagan

So, we already agree that many of your decisions are left to an oracle, especially in what has to do with your expenses or investments, your projects or businesses, etc. Thus, your finances and your economy can be victims of the illusion of control.

How many times, before making a decision, do you consult with an oracle? Do you have a ritual prior to an important decision? Do you have some superstition? For example, do you sign your contracts with your lucky pen? Or do you wear your favorite tie or socks for important meetings? Again, if you are like the majority, when choosing between two options, you will tend to support the decision on some factor that you think will bring you luck, although logically you know that it does not tip the balance in your favor.

In general, our mental calculation of probabilities is poor and this leads us to rely too much on external factors. We are lazy in nature and we rely too much on our luck. We construct rituals and put our hope in them, even when the logical part of our head tells us that we shouldn’t. And we deposit our decisions in them, from what to buy to where to invest our money.

The illusion of control, magical thinking and superstitions are an easy path, they sweeten your decisions and make you skip steps in the logical analysis process. Sometimes you cover your decision processes with fantasy to make it seem that everything is simpler.

Now, we invite you to think about this and to review when and how much you trust your superstitions and how your decisions fall victim to the illusion of control and magical thinking.

steering-bird-ilusion-control-illusion

We are Steering Bird, online advisers in business direction, management and finance. We specialize in business analysis, control and analysis of investment projects, results analysis, processes of budget and forecast, etc.

Contact us if you need help. We invite you to learn about our services and read our articles.

This article has been written in conjunction with the team of Tu Mejor Tú, Metas claras para el éxito. We invite you to visit their website, know their services, articles and to contact them if you need their help.

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