- Clearer Thinking Team
Hyperbolic Discounting: Definition, Examples and Effects
Illusion of control is a cognitive bias that causes people to overestimate their ability to control events or their outcomes. It is a phenomenon in which people believe that they have more control over a situation than they actually do. This can lead to a false sense of security and can have a negative impact on decision-making.
Definition: Illusion of control is a cognitive bias that causes people to overestimate their ability to control events or their outcomes. It is a phenomenon in which people believe that they have more control over a situation than they actually do. This false sense of control can lead to overconfidence and can have a negative impact on decision-making.
Examples:
1. Gambling: People often overestimate their chances of winning when gambling, believing that they have more control over the outcome than they actually do.
2. Investing: People may overestimate their ability to predict the stock market, believing that they can control the outcome of their investments.
3. Health: People may believe that they have more control over their health than they actually do, leading to a false sense of security.
Effects:
1. Overconfidence: The illusion of control can lead to overconfidence, which can lead to poor decision-making.
2. Risk-taking: People may take more risks than they should because they overestimate their ability to control the outcome.
3. Stress: People may become stressed when they realize that they do not have as much control over a situation as they thought.
Do you want to expand your knowledge on this topic? Read our full in-depth article on cognitive biases.
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