Bobarino said:

I guess as a skeptic I am not sold.   To take the example of Fad Diet, most of the time when they fail it is due to real world reasons:  the person is  not following the diet properly, they "cheat", give up, or loosing willpower.  In the end if you follow the diets, they work.

To me, you are "magical thinking" when you say that someone can "believe" themselves thinner.  Diets have measurable results.  They can be tracked in many scientific/medical ways.   Believing its going to work and then it does, well, how on earth can you prove that?  

Even the supplements, if they are proven not to work, but people "believe" as you say and take it and they work, it could be for other reasons.  Say they are taking a supplement to gain muscle bulk, they take the pill but exercise more.  The pill does nothing but they gain muscle, so they believe it is working.  It isn't, it isn't their belief, it is them working out more.  

I guess we would need to take it on a case buy case basis, and I don't really care to do that.   I guess we agree to disagree

No, no, I apologize for the confusion, but that's not what I'm saying.  I'm saying people will continue to participate in these bahaviors even when there is no evidence of their efficacy and even after they've been proven not to work.  No one can "believe themselves thinner."  What I'm saying is that someone will buy a product or a program because they have a hope or a faith in its efficacy even when the product has been proven otherwise or has not demonstrated efficacy.   

Here's two examples of said "magical thinking."  -

1.  Someone tells me that if I take this new Vitamax product I'll lose 20 pounds.  So I buy the product, take it daily, and also, at the same time, start exercising and eating better and lose 20 pounds.  Then I go out and tell my friends (or, worse still) film a commercial explaining that it was Vitamax that caused me to lose the weight, even though there is no active ingredient in that supplement – like most vitamin supplements – which has been demonstrated to have clinical efficacy.  I'm making a false causal connection that, indeed, propergates additonal magical thinking.  So my friend now has "faith" in the drug even though when she takes it, she doesn't plan on exercising or improving her diet – because her faith stems form my testimony. 

2. I thought I saw a ghost.  I was on a ghost hunt with a ghost hunting club and I saw a black shadow on the wall I couldn't explain.  Other people saw it too.  We all tried to debunk it and failed.  None of us are stage magicians or physicists and we don't know anything about what the owners of of the place we were ghost hunting in were doing at the time we were hunting.  But, hey, we're all believers and we trust each other, right?  So since I can't explain what I saw, I know it's paranormal. What else could it be?  And then I go out and tell my friends about this experience – and my best friend who believes in ghosts but has never seen one herself, begins to think, "hey, if Crassus saw that ghost and couldn't explain it, well, he's level headed, it must be true!  I was iffy at first, but now I'm a believer!  Maybe I should go on one of those ghost hunts!"

These are simplified but servicable examples.  Marketing and health care studies show that most people get their most trusted product and health care advice from their friends and family, not from consumer groups or medical experts.   

The thought process that underlies these two fallacies is really the same.  An avenue of inaccruate, scientifically unsound reasoning is propagated because someone initially makes a false assumption about a situation and amplies that decision to another party whose belief system is being bouyed by the false claim.  It's the miracle scenario – something dicey that can't be easily explained away, but has no basis in falsifiable science is propagated because it supports a person or group's underlying prejudice, beliefs, hopes, or desires. 

That's the essence of "magical thinking" – deluding oneself into believing the truth or efficacy of a thing because you either consciously or subconsciously want to believe in it.  Magical thinking need not apply to just the paranormal, but can apply to all manner of decisions, from politics to car purchase.  That's the mechanism I'm interested in – the conscious decision to believe a thing even when you are confronted with evidence to the contrary.   You can imagine how the unscrupulous or merely cynical could take advantage of this situation for personal gain.