Behavioral finance FAQ / Glossary (Superstition)

A    B    C    D    E    F    G-H    I-L    M    N-O    P-Q    R    S    T-U    V-Z

Full list

This is a separate page of the S section of the Glossary



 

Dates of related message(s) in the
Behavioral-Finance group (*):
Year/month, d: developed / discussed,
i: incidental

Superstition



01/2i - 02/8i + see
magical thinking,
mystique,belief,

numerology, luck,
hope and fear

Can blind guidelines based on coincidences
make an uncertain world more certain?

Superstition is a belief that:

Some fortuitous events (seeing a black cat) could be interpreted
   as 'signs'
about
what to do or what will happen in completely different

and unrelated areas.

Certain practices to use - or on the contrary to avoid - would
   bring 
good or bad luck.

Underlying cognitive and emotional traps

Magical shortcuts

Superstition, most of the time, is linked to:

Cognitive shortcuts (availability heuristic, representativeness

heuristic, lazy thinking...).

Magical thinking: seeing correlations between events

actually independent of each other, but that happened once
simultaneously, or that seem to have something in common.

The emotional couple usually labeled

"hope and fear".


The urge to find explanations (rationalization,

and here again availability heuristic) about events, because
of an aversion
to uncertainty.

People might have the feeling to see such explanations when they notice

Some strange coincidences,

Or some clusters of similar facts.

OK, some of those events can give clues that some hidden process might
be at work that need closer investigation.

But many of those occurrences are not reproductive, far
from it
.

This does not stop some people to hastily interpret them as "signs".

=> Then superstitions are born.

Superstition and money

Magical money game


Money is a field prone to many superstitions
, creeds, magic beliefs
and rituals.

This fetishism influences not only spending, saving, borrowing, donating
decisions, but also, even more typically, investing decisions.

Specifically, people tend to have a superstitious interpretation of
asset market price variations.

They try to find illuminating explanations to those variations
that seem to them mysterious and disturbing  (it is true that their causes
are not always clear), and as they feel it painful to live in doubt,

fog and uncertainty (see that word),

When that greed (or fear) to get whatever explanation gets combined
with anchoring, stereotypes and other beliefs, it creates a fertile ground for
esoteric interpretations and magical thinking
(see that word).

=> This is "representativeness heuristic" (see that phrase)
       pushed a bit too far.

(*) To find those messages: reach that BF group and, once there,
      1) click "messages", 2) enter your query in "search archives".

Members of the BF Group, please
 vote on the glossary quality at
BF polls

separ

This page last update: 12/09/15  

  S section of the Glossary
Behavioral-Finance Gallery main page

  Disclaimer / Avertissement légal