CEOs of Fortune 500 companies routinely overestimate their capacity to turn mergers and acquisitions into huge profits, leading to financial losses for themselves, their companies, and their stockholders. Even ordinary people seem to take on an air of invincibility after being promoted to a more powerful position. The consequences of these tendencies, especially when present in the world's most powerful leaders, can be devastating.

In a new study, Nathanael Fast and Deborah Gruenfeld at Stanford Graduate School of Business, Niro Sivanathan at the London Business School and Adam Galinsky at the Kellogg School of Management at Northwestern University, show that power can literally "go to one's head," causing individuals to think they have more personal control over outcomes than they, in fact, do.

"We conducted four experiments exploring the relationship between power and illusory control - the belief that one has the ability to influence outcomes that are largely determined by chance," said Galinksy, "In each experiment, whether the participant recalled power by an experience of holding power or it was manipulated by randomly assigning participants to Manager-Subordinate roles, it led to perceived control over outcomes that were beyond the reach of the individual. Furthermore, the notion of being able to control a 'chance' result led to unrealistic optimism and inflated self-esteem."

For example, in one experiment, power holders were presented with a pair of dice, offered a reward for predicting the outcome of a roll, and then asked if they would like to roll the dice or have someone else do it for them. Each and every participant in the high power group chose to roll the dice themselves compared to less than 70% of low power and neutral participants, supporting the notion that simply experiencing power can lead an individual to grossly overestimate their abilities, in this case, influencing the outcome of the roll by personally rolling the dice.

These results, reported in Psychological Science, a journal of the Association for Psychological Science, have implications for how power, once attained, is maintained or lost. The authors note that positive illusions can be adaptive, helping power holders make the seemingly impossible possible. But the relationship between power and illusory control might also contribute directly to losses in power, by causing leaders to make poor choices. They conclude that "the illusion of personal control might be one of the ways in which power often leads to its own demise."

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