What is this phenomenon called?

Discussion in 'Investor Psychology & Mindset' started by chylld, 5th Sep, 2018.

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  1. chylld

    chylld Well-Known Member

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    I'm seeing this more often recently and don't know if there's a term for it. I'll try and illustrate it with a property-themed example.

    Joe Bloggs wants to research the best place to buy property. He checks out prices across the city and observes how transport infrastructure serves some areas better than others, but for some reason he gravitates toward an area near his old school, because it just 'feels right' (mere-exposure effect)

    However he decides to research properly, and read various property investment newsletters and trawl various forums and lookup school ratings etc. He doesn't read anything particularly bad about his old area; someone on the forum even mentioned it was on the rise! He can't quite remember what other areas were mentioned, but he's happy that his old area appears good based on 'objective research' (confirmation bias)

    Joe then decides to take some time off the direct property research and begin looking into finance. He spends several weeks learning how loans work, which banks have which facilities, which brokers are friendly, how much can he borrow etc. Despite doing no additional property research in the past few weeks, he has grown so confident in his old area that he not only decides to invest in it, but also boasts his property 'expertise' to all his friends.

    Why did Joe's belief strengthen despite not looking at other areas properly, or even his old area at all recently? Is there a term that encapsulates Joe's tunnel-vision that elevated himself to the status of 'expert' in his own mind?
     
    chylld, 5th Sep, 2018
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  2. Simon Hampel

    Simon Hampel Founder Staff Member

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    Sounds to me like confirmation bias kind of covers it?

    Or are you more referring to the unfounded self-confidence - ego?
     
    Simon Hampel, 5th Sep, 2018
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  3. chylld

    chylld Well-Known Member

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    Yes I'm referring more to the growth in ego / self-confidence despite the lack of broader experience. I see how confirmation bias acts as a strong mechanic to get there, but it doesn't explain the last bit.
     
    chylld, 5th Sep, 2018
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  4. Simon Hampel

    Simon Hampel Founder Staff Member

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    I think there are probably elements of narcissism there - although that is a very broad and often misused term.

    "an inflated sense of their own importance"

    ... although I think the traits you are describing are far more common than people with actual diagnosed narcissistic personality disorder (which I would think would exhibit multiple symptomatic traits rather than just this one), so I'd be reluctant to simply label it "narcissism".

    I'm not an expert in this area - so there's probably some subtle term or definition I'm missing here to describe those personality traits.
     
    Simon Hampel, 5th Sep, 2018
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  5. chylld

    chylld Well-Known Member

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    Narcissism does touch on it, but agree it's not the most accurate term here.

    A simpler example: Fred has been fishing at the same spot on the lake for several years. A friend comes along and suggests "hey you know there are more bigger fish just over there?" Fred replies "Excuse me, how many years do you think I've been fishing? I know what I'm doing."
     
    chylld, 5th Sep, 2018
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  6. Propertunity

    Propertunity Well-Known Member

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    Ladies and gentlemen, there is only one word for that - idiocy.
     
    Propertunity, 5th Sep, 2018
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  7. Morgs

    Morgs Well-Known Member Business Member

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    For mine the textbook definition of arrogant...

    arrogant
    ˈarəɡ(ə)nt/
    adjective
    1. having or revealing an exaggerated sense of one's own importance or abilities.
      "he's arrogant and opinionated"
     
    Morgs, 5th Sep, 2018
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  8. willy1111

    willy1111 Well-Known Member

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    Maybe the "Lake Wobegon effect" where one over estimates their abilities/capabilities and sees oneself as better than others???

    Occupy Lake Wobegon
     
    willy1111, 5th Sep, 2018
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  9. chylld

    chylld Well-Known Member

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    Kaboom, there it is... found it in that article: self-enhancement bias

    Kind of like an innocent arrogance.
     
    chylld, 5th Sep, 2018
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