Abstract

The topic is to examine the relationships between effectuation and biases, taking causation as the reference point. To do that, we base our theoretical development on recent advances in JDM, i.e. the theory of contingency judgment in illusion of control (Blanco, Matute, and Vadillo, 2011; Blanco and Matute, 2015) and the evolutionary theory of overconfidence (Johnson and Folwer, 2011). In particular, we hypothesize that more effectuation leads to less overconfidence bias and more illusion of control; and that, on the contrary, more causation leads to less illusion of control bias and more overconfidence. Overconfidence denotes the overestimation in predicting one’s own performance (Busenitz, 1999; Gudmundsson and Lechner, 2013), and illusion of control refers to the behavior of an individual over-attributing how much one’s skills and actions can improve performance (Langer, 1975).

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