NBC Nightly News anchor Brian Williams is having a bad week.

On a broadcast last week, Williams recalled how a military helicopter he was on in Iraq in 2003 came under rocket fire and was forced to land before the crew was rescued by Army ground troops.

Several military members came forward to say Williams wasn't on the targeted helicopter. Williams now admits they are right. He was on another helicopter an hour away that did not come under enemy fire.

Was Williams lying? Maybe. Although it's hard to think how someone as high-profile as Williams thought he could get away with fabricating a story that is so easy to verify.

Could it have been an innocent error? I think so.

False memories are more common than you might think, particularly when they involve emotional events, like reporting from a war zone. Understanding how your mind can fool you is key to knowing how seriously to take yourself, even in something like investing.

For decades, psychologists have interviewed people about an emotional topic, added some fake details, and watched their subjects' memories trick them.

Psychologist Lawrence Patihis of the University of California, Irvine, discussed the Sept. 11 attacks with a group of research subjects, and found that, when prompted, several could vividly describe seeing video of Flight 93 crashing into a field in Pennsylvania (this video, of course, doesn't exist). "It just seemed like something was falling out of the sky," one participant said. "I was just, you know, kind of stunned by watching it go down."

One group of researchers asked 5,000 participants if they recalled a fake political event taking place, such as President Barack Obama shaking hands with former Iranian President Mahmoud Ahmadinejad. "Approximately half the participants falsely remembered that the false event happened, with 27% remembering that they saw the events happen on the news," they found.

Hillary Clinton had a similar flub a few years ago, recalling coming under sniper fire after her plane landed during a 1996 trip to Bosnia, running from the plane toward cover "with our heads down." In reality, video showed, Clinton walked calmly off the plane where she was presented with a poem from an eight-year-old girl.

"Memory is man's greatest friend and worst enemy," said novelist Gilbert Parker. That's because memory is just a series of woven-together stories we tell ourselves. And we can be such good storytellers -- and such elaborate weavers -- that what we recall as fact can be bits and pieces of truth spun into something that never happened.

Clinton, for example, was traveling to a war-torn country. As a high-profile target, that was surely a scary trip. There might have been legitimate threats from snipers. Or snipers later that day, a few weeks later, or the month before. She may have been rushed off a plane during a different trip, or heard the Secret Service discussing plans in case of an ambush. All that fear put together could result in Clinton's mind filling in the gaps of what actually happened with vivid, emotional thoughts of what could have happened.

Williams reported a story on the helicopter that came under actual fire. Replaying "what-if" thoughts in his head about a helicopter an hour in front of his own -- which surely terrified he and his family -- could have caused him to weave the two stories together.

"I don't know what screwed up in my mind that caused me to conflate one aircraft with another," Williams said after admitting his mistake.

But psychologists might.

False memories "are much more common that people intuitively think" and "should be considered as a possible explanation in cases like this," psychologist Chris Chabris tweeted yesterday. 

Elizabeth Loftus, a psychologist at the U.C. Irvine, has persuaded research participants using false information to believe they were lost in a shopping mall, witnessed a demonic possession, and met Bugs Bunny at Disneyland. Other psychologists have used doctored photos to convince people they rode in a hot-air balloon at a fair.

"We can easily distort memories for the details of an event that you did experience," Loftus told The Guardian in 2003. "And we can also go so far as to plant entirely false memories -- we call them rich false memories because they are so detailed and so big."

It all comes down to taking an event that actually happened and pushing it against one that could have happened, should have happened, or almost happened. Our storytelling mind takes it from there, filling the gaps of actual memories with the visions of false ones.

"Because memory is reconstructive, it is subject to confabulation -- confusing an event that happened to someone else with one that happened to you, or coming to believe that you remember something that never happened at all," wrote psychologists Caroll Tavris and Elliot Aronson in their book Mistakes Were Made (But Not by Me). "Memories create our stories, but our stories also create our memories. Once we have a narrative, we shape our memories to fit into it."

It's entirely possible Williams, Clinton, and everyone else in this story is an attention-seeking liar.

I wonder, though, how much all of us fool ourselves when it comes to investing or other parts of our lives.

Do you remember yourself as a brave, bargain-hunting opportunity seeker when the market crashed in 2008? Check your brokerage statements. You might have been more fearful than you recall.

Do you remember sidestepping the hoopla of the dot-com bubble? Here again, check your brokerage statement.

Do you remember tripling your money on some hot stock? Go back and add up the numbers again.

Maybe you'll be surprised.

"I would not have chosen to make this mistake," Williams said.

None of us would.

Check back every Tuesday and Friday for Morgan Housel's columns. 

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