By Jasper Brown

Performance is a peculiar concept. It takes hundreds of hours to develop, but is showcased within a matter of minutes, even seconds. These events are recalled to the mind with relative ease, such as interviews for jobs, internships, or places of education. No doubt, the most vivid in one’s memory are interactive events. They are usually over much faster than you recall them, comparable to running away from a dangerous animal.

Regardless of whether you thought of your performance during the job interview as above or below average, you think you’ll get it. After all, why would the figures of probability apply to you? As is more often the case, your expectations of the outcome exceed the outcome itself. However, one wonders why this is the case. We behave in ways in which we try to control certain features of our life, such as our time, money, relationships, and health. Despite our hard work, we are swallowed by angst when things don’t go our way. We behave with the intention of controlling our circumstances, but behaviours can only influence them, and we are constantly interacting with an environment which we possess no influence over. This is a phenomenon known as the illusion of control.

The illusion of control is the psychological process in which one overestimates the influence our behaviour has over uncontrollable outcomes.^[i] This mental feature was identified over 50 years ago under the umbrella category of heuristics and cognitive biases, by psychologists Amos Tversky and Daniel Kahneman.^[ii] Heuristics and cognitive biases highlight how people’s reasoning abilities are inadequate to the laws of probability and logic.^[iii] For example, many of us engage in optimism bias by having an overly positive perception of the world, seeing it as less harsh than it truly is. Similarly, we often overestimate our own positive qualities and believe our goals are more attainable than they truly are. This tendency leads us to have an inflated sense of our ability to predict future events, ultimately fostering a sense of unwarranted optimism.

The illusion of control occurs when we interact with our environment. Researchers at the University of Deusto and the University of Granada, Spain, found that participants involved in a cause-and-effect relationship with a fixed outcome felt more control over the situation than participants merely observing the same cause-and-effect relationship. Participants were prompted to imagine being medical doctors, tasked to implement a fake medicine on fictitious patients who were to be diagnosed with a fabricated illness, for the purpose of the activity. In contrast to the control group observing the fixed outcome of the medicine in the patients, those playing as doctors felt more in control of the outcome of the treatment.^[iv]

The previously mentioned heuristics and biases are ingrained within us from an evolutionary perspective. Our memory plays a significant role in this. We want to be able to predict our future as it gives us an increased sense of stability, as we know that the goals we set, and the time and effort expended to achieve them are not futile.[v] As humans, predicting the future requires us to use the past as a point of reference to recall how similar situations happened. During this process, we commit a self-serving bias, as we attribute our past successes to internal attributes, but failures to external factors beyond our control.[vi] The self-serving bias forms a skewed representation of our performance in the environment. Moreover, reliance on our memory and experience to predict the future is the product of overconfidence. The overconfidence bias leads us to develop unrealistic expectations and be disappointed when outcomes do not match those expectations. As statistician Nassim Taleb has argued, the absence of evidence for past events, such as only seeing white swans, is not evidence against unexpected future events, such as the existence of black swans.[vii]

It is most likely the case that you have committed some of these cognitive biases, but most certainly true that the errors of others have had an impact on your life. Many of us want to be on top of our personal finances, and even the most finically prudent of us might invest their money in mutual funds or the stock market. Researchers at Duke University investigated the returns of Chief Financial Officers (CFO) at large corporations estimated by the Standard & Poor’s index, a stock market index that tracks the stock performance of the 500 largest companies listed on various US stock exchanges. They found the correlation between the estimates made and the true value to be slightly less than zero.^[viii] In other words, the accuracy of CFO’s short-term forecasting ability was no better than chance. Hence, control over your finances may be precarious, given that those we entrust with our money are prone to the overconfidence bias as well.

Similarly, we try to be in control of our health by having a balanced diet and exercising regularly. In unfortunate circumstance, our health deteriorates, and we entrust society’s medical professionals to aid us. A systematic review of physicians from various medical specialities from the early 1980s to the late 2000s found that overconfidence among physicians was common and often led to diagnostic errors, inappropriate treatment, and poor patient outcomes. For example, clinicians who were completely certain of a diagnosis prior to the disease of a patient were wrong 40% of the time.^[ix] However, this expert overconfidence is encouraged by clients, as it is more valued than uncertainty.[x]

In a grander scheme, these cognitive mistakes can have consequences at a macro level. The illusion of control makes people subject to the planning fallacy, a cognitive bias where predictions made underestimate the time and resources required to complete a future task.[xi] For example, the planning and construction of the Sydney opera house from the 1950s to the early 1970s was subject to the planning fallacy. The construction of the opera house was predicted to take four years at a cost of AU$7 million. However, this estimate did not consider that the construction materials were too brittle. The planners had the illusion of control over situational factors which were out of their control. This led to the underestimation of the time and resources for the project as it was eventually built in 14 years at a cost of AU$102 million.[xii]

Large projects are often subject to the planning fallacy. For example, several controversial rail projects in the Netherlands, such as the Betuwe lijn constructed in 2007, exceeded their intended budget by €1.1 billion.^[xiii] The Hogesnelheidslijn (HSL) Zuid lijn, which budget ballooned from €1.1 billion^[xiv] to €6.9 billion. In Amsterdam, the Noord-Zuid metro line was opened in 2018 after 15 years of construction at a cost of €3.1 billion, far exceeding the initial estimates.[xv] More recently, the Floriade Expo in 2022, a horticulture exhibit in Almere showcases the overconfidence bias as the project went ahead despite no real support for it from the city’s residents. The exhibit brought only a third of its estimated visitors, operating at a €34 million loss.^[xvi] Budgets spiralling out of control because they are predominantly funded by the public via tax spending, which could have been better invested elsewhere.

Despite the criticism of the illusion of control, particularly overconfidence, it remains an essential characteristic of human thought and behaviour. One of the cornerstones of human progress has been our persistence in the face of failure. Life is rarely a hole-in-one. All achievements, be they technological, biological, or social, that have increased our living standards compared to our distant and even recent ancestors, have been the product of trial and error. Optimism is essential for success, as nothing but demise awaits those who lack confidence and perseverance in the face of setbacks. It is important to be aware of our shortcomings, so that we are aware of the mistakes we often make. Doing this can improve the management efficiency of large infrastructure projects or make us consider the goals of the other party in interviews, enabling us to diminish our expectations. We frequently fall victim to the illusion of control without much effort. As Danish philosopher Søren Kierkegaard once explained, “Life can only be understood backwards, but it must be lived forwards.”xvii

Endnotes

[i] Yarritu, I., Matute, H., & Vadillo, M. A. (2014). Illusion of control: the role of personal involvement. Experimental psychology, 61(1), 38–47. https://doi.org/10.1027/1618-3169/a000225

[ii] Tversky, A., and Kahneman, D. (1974). Judgment under uncertainty: heuristics and biases. Science 185, 1124–1131.

[iii] Bruckmaier, G., Krauss, S., Binder, K., Hilbert, S., & Brunner, M. (2021). Tversky and Kahneman’s Cognitive Illusions: Who Can Solve Them, and Why? In Frontiers in Psychology (Vol. 12). Frontiers Media SA. https://doi.org/10.3389/fpsyg.2021.584689

[iv] Yarritu, I., Matute, H., & Vadillo, M. A. (2014). Illusion of control: the role of personal involvement. Experimental psychology, 61(1), 38–47. https://doi.org/10.1027/1618-3169/a000225

[v] Newby-Clark, I. R., McGregor, I., & Zanna, M. P. (2002). Thinking and caring about cognitive inconsistency: When and for whom does attitudinal ambivalence feel uncomfortable? Journal of Personality and Social Psychology, 82(2), 157–166. https://doi.org/10.1037/0022-3514.82.2.157

[vi] Mezulis, A. H., Abramson, L. Y., Hyde, J. S., & Hankin, B. L. (2004). Is there a universal positivity bias in attributions? A meta-analytic review of individual, developmental, and cultural differences in the self-serving attributional bias. Psychological Bulletin, 130(5), 711–747. https://doi.org/10.1037/0033-2909.130.5.711

[vii] Taleb, N. N. (2007). Black Swans and the Domains of Statistics. In The American Statistician (Vol. 61, Issue 3, pp. 198–200). Informa UK Limited. https://doi.org/10.1198/000313007×219996

[viii] Graham, J. R., & Harvey, C. R. (2005). The Long-Run Equity Risk Premium. In SSRN Electronic Journal. Elsevier BV. https://doi.org/10.2139/ssrn.795369

[ix] Croskerry, P., & Norman, G. (2008). Overconfidence in Clinical Decision Making. In The American Journal of Medicine (Vol. 121, Issue 5, pp. S24–S29). Elsevier BV. https://doi.org/10.1016/j.amjmed.2008.02.001

[x] Anderson, C. A., & Tindall, K. R. (1998). Backtalk from the poorly informed: Effects of expertise and relative social status on backlash against personal and expertise criticism. Journal of Personality and Social Psychology, 75(4), 1231–1245. https://doi.org/10.1037/0022-3514.75.4.1231

[xi] Buehler, R., Griffin, D., & Peetz, J. (2010). The planning fallacy: Cognitive, motivational, and social origins. Advances in Experimental Social Psychology, 43, 1-62. https://doi.org/10.1016/S0065-2601(10)43001-6

[xii] The Sidney Opera House construction: A case of project management failure. (n.d.). The Sidney Opera House Construction: A Case of Project Management Failure. https://www.eoi.es/blogs/cristinagarcia-ochoa/2012/01/14/the-sidney-opera-house-construction-a-case-of-project-management-failure/

[xiii] Netverklaring. (n.d.). Netverklaring | ProRail. https://www.prorail.nl/samenwerken/vervoerders/netverklaring

[xiv] HSL Zuid: rail becomes reality | Case Studies | IJGlobal. (2001, December 1). HSL Zuid: Rail Becomes Reality | Case Studies | IJGlobal. https://www.ijglobal.com/articles/116230/hsl-zuid-rail-becomes-reality

[xv] Dekker, S. W. A., & Cooke, R. M. (2020). Understanding and learning from major incidents: A retrospective analysis of the Amsterdam North-South metro line construction project. Safety Science, 121, 387-400. https://doi.org/10.1016/j.ssci.2019.08.005

[xvi] Almere residents fear they will pay for Floriade disappointment. (2002, January 1). NL Times. https://nltimes.nl/2022/06/26/almere-residents-fear-will-pay-floriade-disappointment