Fishing outside the reef: the illusion of control and finance
Humans regularly see patterns where there are none, but stress makes this tendency worse. Some new studies suggest this may be making the current market troubles worse. Jennifer Whitson and Adam Galinsky (Lacking Control Increases Illusory Pattern Perception, Science 3 October 2008 Vol. 322. no. 5898, pp. 115-117) demonstrated that when people feel they lack control, they see more illusory patterns in noise and stock market information, perceive conspiracies and accept superstitions more readily. But is this the key to understanding the financial turmoil?
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