We all want to bend the world to our will, but more often than not, it is the other way around – a fact that we often fail to recognize. This tendency to exaggerate our ability to influence events is known as the illusion of control, a cognitive bias that causes us to overestimate our ability to control the world around us, leading to overconfidence in our ability to influence the outcomes of our decisions.
That can really cost you.
A 2003 study of traders working at four City of London investment banks found those “with a high propensity to illusion of control exhibit a lower profit performance and earn less than those with low illusion of control.” The same study also found a strong correlation “between illusion of control and poor risk management and analysis.”
The illusion of control can lead executives to exaggerate their ability to find and recruit top talent, design winning products, or secure needed financing. It can also lead managers to spend too little time questioning their plans before executing them or doing the heavy lifting necessary to guarantee their success.
The reverse can be true as well.
Ironically, researchers also have found that, in situations in which people do have a great deal of control, they tend to underestimate the amount of control they actually exert. This underestimation can lead to poor decision making, for instance, by obscuring our awareness of how we contribute to a competitor’s success or by causing us to miss out on key opportunities.
Understanding the Illusion of Control
The illusion of control was first identified by psychologist Ellen Langer in the 1970s. She first observed this cognitive bias in situations involving chance, such as gambling or stock market investments, where outcomes are largely unpredictable. Langer’s experiments demonstrated that when individuals were given choices or allowed to practice, even in scenarios governed by pure chance, they exhibited greater confidence in their influence over the results.
The roots of this bias can be traced to a fundamental human need for control, which is linked to survival instincts. Feeling in control reduces stress and anxiety, making us feel safer and more secure. Therefore, our brains often create an illusion of control to maintain a sense of order and predictability in an inherently chaotic world.
The illusion of control can significantly impact decision making in various domains, leading to overly optimistic assessments of risk and ability.
For example, in financial markets, traders might believe that their expertise or past success grants them control over market movements, prompting them to take unwarranted risks.
Similarly, in personal health, individuals might underestimate the role of chance in medical outcomes, leading to poor compliance with treatment protocols or preventative measures.
In organizational settings, leaders might fall prey to this bias by overestimating their ability to steer complex projects or influence organizational culture changes, ignoring the myriad external factors that play critical roles. This can result in inadequate planning, failure to anticipate challenges, and misallocation of resources.
Five Ways to Dispel Illusions of Control
Mitigating the effects of the illusion of control requires awareness, education, and specific cognitive strategies. Here are several approaches to counter this bias:
- Awareness and Education. Recognizing the existence of the illusion of control is the first step toward mitigation. Educational programs and workshops that focus on cognitive biases can equip individuals and organizations with the knowledge to identify and understand this phenomenon.
- Fostering a Realistic Assessment of Control. Individuals should be encouraged to critically assess which aspects of a situation they can influence and which are beyond their control. Techniques such as the locus of control assessment can help individuals distinguish between internal and external controls realistically.
- Encouraging Reflective Thinking. Reflective thinking involves questioning one’s assumptions and beliefs about control. Practices such as keeping a decision journal where you record your predictions and the actual outcomes can help illustrate the role of chance and reduce bias over time.
- Promoting Group Decision-Making. Collective decision-making can help counter individual biases, including illusions of control. By incorporating diverse perspectives and challenging each other’s assumptions, groups can arrive at more balanced and realistic decisions.
- Red Teaming Important Decisions. Using decision support red teaming tools and techniques can help organizations better understand the myriad factors that can contribute to the success or failure of a plan or strategy, allowing decision makers to think more three-dimensionally before acting.
By understanding this bias and implementing strategies to counter it, individuals and organizations can enhance their decision-making processes, align expectations with reality, and ultimately achieve better outcomes. As we navigate a world teeming with uncertainty, fostering a realistic sense of control not only sharpens our decision making but also prepares us for the inevitable surprises life throws our way.