Luck and Chance: The Working of the Mind
The Study of Why We Believe in Luck
Recent work in the study of the mind shows that many people think they can fix odds that are set by chance. About 76% of all people think they can change outcomes that are left to luck, and 81% of market traders think good results come from skill but bad ones come from outside forces.
Why Our Brains Think This Way
This way of thinking is deep in our brains. Our brain’s old fear system acts quicker to things it can see and touch than to numbers or odds. This shows why we trust what is real more than numbers.
Choices We Make
Believing we can control random events changes how we choose and see risks. This can make us make bad calls in money and safety. This kind of thinking makes us less likely to make the best choices.
How to Think Better About Odds
There are ways to fight bad thinking:
- Learn about stats and odds.
- Use steps to make choices without mixing feelings.
- Keep track of results to see real vs. thought success.
- Learn ways to know and fix bad odds thinking.
Using these steps right can help us see odds better and make smarter choices.
The Thinking Behind False Sureness
Why We Think We Are Sure
Three main wrong ways of thinking let us believe we have skill over luck. Wanting to be right makes people hold on to facts that fit what they already think is true and ignore other facts. Studies show people hold on to matching facts 27% more than facts that don’t match.
The False Feeling of Control
The mind often thinks it can change chance events. About 76% of people think their choices change things left to luck.
Fault in Blaming
In money choices, many say good outcomes come from them, but bad ones come from outside. A big study shows 81% agree.
How False Sureness Works in the Brain
Studies of the brain during these moments show parts that react to rewards light up, making us think we control more than we do. Understanding this is key to know real skill from just good or bad luck.
Mistakes in Understanding Odds
How We Get Odds Wrong
Wrong Ways of Seeing Odds in Choices
People often get odds wrong in many ways of deciding. This is due to a few types of mistakes:
- Seeing rare events as more likely.
- Not seeing common things as likely.
- Ignoring base info on odds.
- Mistaking one event’s effect on another.
Mistakes in Seeing Low and High Odds
People think low chances, like plane crashes, happen more than they do, while common chances, like car crashes, less than they do. They often don’t use key facts, like knowing that 1% of people have a sickness when a test is 95% right, can lead to errors.
How These Mistakes Change Choices
Mistakes in seeing random events as patterns can make us think we are “due” for a win, leading to big losses. These mistakes happen even in trained people, showing it’s more about natural thinking than lack of skill.
Key Points:
- Focusing too much on unlikely outcomes.
- Ignoring important odds info.
- Mistaking random patterns.
- Bad judgments in own risks.
