FREE MARKET FAIRY TALES

I've come across a few believers in the Free Market who strongly believe that they are SOLELY responsible for their own success. They often turn this into a diatribe against the modern welfare state, which the wingnuts now call "the nanny state." One possible reason they feel that way is "self-attribution bias." This concept was first proposed by Daryl Bem in 1965 and there has been a great deal of empirical work since then that validates the concept. A 2007 paper by Martin Weber and Frank Welfens, "How do Markets React to Fundamental Shocks: An Experimental Analysis on Underreaction and Momentum" gives a brief description of how this bias affects the markets:

In addition, investors suffer from biased self-attribution (Bem 1965, Miller and Ross 1975) and irrationally increase the belief in their own trading ability if subsequent price developments confirm a previous trading decision. On average, public news increase investors’ beliefs in their noisy private signals, which makes them trade aggressively into that direction. This in turn leads to short-run overreaction and momentum price drifts followed by long-term price reversals to fundamental value as documented by De Bondt and Thaler (1985).