It’s not easy to make the right choice, but it’s doable. We can continue to float along on a cloud of serotonin, playing the fool and suffering the consequences, or we can challenge our biases. Knowing that these issues exist, we have a choice. In a 2013 study, the researchers Arvid Hoffmann and Thomas Post highlighted how a self-attribution bias can hurt investors and lead to repeated mistakes because they “simply attribute bad returns to factors beyond their control.” The same study also showed that when we ignore the role of luck, we’re also blind to bad investment behavior like overtrading or underdiversification. On top of our bias, we have a very difficult time separating skill from luck.Īs a result, we’re susceptible to the lucky fool syndrome and the problems that come with it.

It means we’re inclined to take all the credit for things going well, but we have no problem blaming outside forces when things go wrong. What sets off the lucky fool syndrome? Psychologists call it the self-attribution bias. Their strings of successes will inject them with so much serotonin (or some similar substance) that they will even fool themselves about their ability to outperform markets (our hormonal system does not know whether our successes depend on randomness),” Mr. They will act as if they deserved the money. “Lucky fools do not bear the slightest suspicion that they may be lucky fools - by definition, they do not know that they belong to such category. Taleb described in his book “ Fooled by Randomness.” As a result, we become the lucky fools that Nassim N. Li, a world-class athlete, is willing to acknowledge the role of luck in her success, what makes it so hard for the rest of us? Well, we like thinking we’re just that good, particularly if we’re talking about our investment success. Even she described her win as “very lucky.” Skill may have gotten her to the Olympics, but luck played a role in her gold-medal victory. Li is clearly an exceptional athlete (she was overall world champion in 2012), but it’s impossible not to see the role that simple luck played in the race. While the other skaters managed to get back up, there was no way for them to catch Ms. Only one skater, Li Jianrou of China, didn’t fall down. Park Seung-hi of South Korea then slipped in the next turn.

Seconds after the race started, Elise Christie of Britain made a passing move in the second turn that caused her and Arianna Fontana of Italy to crash.

If you had a chance to watch the women’s 500-meter final, you saw a perfect example of the fine line between skill and luck that drives this sport. The races are fast, and almost anything can happen. It has to be one of the more entertaining Olympic events. Watching the Olympics a few weeks ago, I got pulled in to the drama of short-track skating.

Fool of randomness