Dance With Chance - The Illusion of Control

"In a nutshell, Dance with Chance is all about knowing what you can and cannot predict and, therefore, what you can and cannot control." Robin Hogarth

Robin Hogarth

Welcome to a Big Picture Channel podcast on Total Picture Radio. Why did no one see the subprime crisis coming? Does golf make you live longer? Why does the casino always win at roulette? What are the odds of a coconut landing on your head?

A new book titled Dance with Chance - Make Luck work for you - answers these questions and many more besides. More importantly, it shows us how to gain greater control over many aspects of our lives - by knowing just when to trust to luck. Joining us is one of its three authors Robin Hogarth.

Think about it. Every day human beings make decisions. Some are important: should you invest your life savings in the stock market? Others are trivial: should you take an umbrella today? But in both these cases you have no control. The stock market will go up or down, it will rain or it won’t… and there’s nothing you can do about it.

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The problem comes when people seek to gain control by making predictions. By consulting an investment expert or a weather forecast, they think they can control the value of their investments or avoid getting wet.

But this is just an illusion. An illusion that psychologists call ‘the illusion of control’.

In many areas of life – the stock market and the weather are just two examples – accurate prediction just isn’t possible. There is always uncertainty about the future in most areas of our lives. Throw in some emotions, such as greed, fear and hope, and human beings’ predictions get even less accurate. So what are we to do?

Talking Points:

Robin, it's not usual for Hollywood screenplays to have three authors, but it is someone unusual for a non-fiction book. How did Dance with Chance come about?
Let's return to my introduction: Why did no one see the subprime crisis coming?
Right from your preface: Why do investment portfolios created by blindfolded monkeys throwing darts at stock listings often outperform those chosen by professional money mangers earning six figure salaries?
Why do we overestimate our ability to predict future events and underestimate the influence of chance.
Talk to us about the illusion of control.
In what ways is the illusion of control influencing our response to the economic downturn.
Given all of the research you and your co-authors did for Dance with Chance, what is the base way for the us to invest our money?
What are the potential costs of thinking you have control over things you don't?
In your book, you distinguish between two kinds of uncertainty - can you describe these for us?
How do you advise people cope with uncertainty?
How should your conclusions be used to inform decision-making?
Why can't we rely on solid data bout the past to predict the future?
Can you use any of the strategies in Dance with Chance in a job search or career transition?
Final question: How can you reap benefits from uncertainty?

Robin Hogarth Biography:

Robin is an American citizen, who gained his PhD from the University of Chicago in 1972. Yet he is also a relic of the British Empire. Born in India to British parents during World War II, he was sent back to Scotland as a child to be educated. Despite all of this, he now lives and works in Spain, as a research professor at Universitat Pompeu Fabra (UPF to its friends) in Barcelona where he has the joy of interacting with talented PhD students from all over the world. Most implausibly, Robin does not have an undergraduate degree. After leaving high school, he became a chartered accountant in the UK by being an “apprentice” and also indulged in playing rugby (as a wing or center-three-quarter) for London Scottish, at the time one of the better club sides in the UK. But in 1967, he headed for France to do an MBA at INSEAD. From there it was a short step to doing a PhD at the University of Chicago (where, since he had a good scholarship, no one cared about his lack of an undergraduate degree). Robin eventually became a member of faculty at the Graduate School of Business at the University of Chicago, after holding positions at INSEAD and the London Business School.

During his time on the faculty at Chicago (1979 to 2001) Robin served as Deputy Dean (1993 to 1998) and Wallace W. Booth Professor of Behavioral Science. He was also responsible for setting up the University of Chicago’s executive MBA program in Europe.

Robin’s research focuses mainly on the psychology of judgment and decision making. He has published many books and papers and in 2007 was awarded an honorary doctorate by the University of Lausanne in recognition of his contributions to research on decision making. He has also provided consultancy services to numerous organizations in Europe and the US.

Resources

Dance with Chance website
Dance with Chance (Link to Amazon.com)