Economics Cognitive Biases Questions
The illusion of control refers to the tendency of individuals to overestimate their ability to control or influence outcomes that are actually determined by chance or external factors. In economic decision-making, this bias can lead individuals to believe that they have more control over the outcome of their investments or financial decisions than they actually do. This can result in individuals taking on excessive risks or making suboptimal choices based on their inflated sense of control. Ultimately, the illusion of control can lead to poor economic decision-making and potentially negative financial outcomes.