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.

Do you have extra 15 minutes today? Takeour fun and interactive quiz to learn which of 16 reasoning styles you use, your overall level of rationality, and what you can do now to improve your rationality skills.