Illusory Pattern Perception

Science magazine recently published a report by Whitson and Galinsky entitled Lacking Control Increases Illusory Pattern Perception.

The gist of the article is that people who lack control are more likely to perceive patterns that are not there. Of particular relevance is this: In one of the six experiments detailed in the article, people were told about the financial performance of two companies, with the same number of positive and negative statements for both, but only given half as much information about the second company. They were then asked to make an investment decision about the companies. If told that the stock market was volatile, they had a heightened awareness of the negatives of the company that they were provided less information about.

The entire article is worth reading. It certainly has implications for analysts and analyst and investor relations folks, in this current environment of high market volatility and generalized economic uncertainty.

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Posted on October 9, 2008, in Analyst Life and tagged . Bookmark the permalink. Leave a comment.

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