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Riskfactor - The illusion of control

Imagine for a moment that you decide to play lottery. At the lottery shop, you have two options: either get a lottery ticket from the hands of the shopkeeper, or choose a lottery ticket yourself. Mathematically, it does not make a difference which option you choose, however, most people elect to pick the lottery ticket by themselves intuitively feeling that one would be more likely to win the lottery by doing so. This bias in our minds is referred to as the illusion of control and it is the innate tendency to overestimate our ability to influence outcomes — even those that are actually down to chance.

Indeed, an experiment has shown that the more power you feel, the stronger the illusion of control becomes. There is evidence the illusion of control may play a role in the decision to start a venture. An individual’s belief in his or her ability to control a venture’s outcome affects his or her intentions to form a venture. This belief, however, is based upon perceptions and may be inaccurate.

Power can also contribute to the illusion of control. According, to Niro Sivanathan, Assistant Professor of Organisational Behaviour at London Business School, “Power can over inflate self-esteem to the extent that people believe they have more control over outcomes than they actually do.” Niro’s work explored how individuals cope with the sudden acquisition or loss of power. What he found is that rapid increases in power can prompt people to overreact to their newly enjoyed power with very negative outcomes as a result of the illusion of control. Niro found that people in power believed themselves to have control over uncontrollable situations, such as predicting the outcome of a die roll. It doesn’t take much imagination to see how this could lead to leadership and decision making snafus.

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