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Elude the Illusion: Understand The Illusion of Validity So You Don’t Fall Victim To This Common Decision Making Bias

April 27th, 2018 2 comments

The illusion of validity will often cause people to make risky bets on a roulette wheel

Have you ever placed a bet that a certain number will appear on dice or a roulette wheel? Maybe a number has come up repeatedly so you assume that there is less of a chance that this number will appear in the next roll or spin, even though every number has an equal probability of coming up. Many people fall victim to this bias and end up losing money at casinos. This phenomenon can be explained by the illusion of validity. Defined as a person’s tendency to overestimate their accuracy in making predictions given a set of data, the illusion of validity is one common source of bias in decision making (Einhorn, 1978).

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