biases Flashcards
Anchoring Bias
People are over reliant on the first piece of info they hear. In a salary negotiation, whoever makes the first offer establishes a range of reasonable possibilities in each person mind.
Availability Heuristic
People overestimate the importance of info that is available to them. Aperson might argue that smoking is not unhealthy becuase they know someone who lived to 100 and smoked 3 packs a day
bandwagon Effect
The porbability of one person adopting a belief increases based on the number of people who hold the belief. This is a powerful form of groupthink and is reason why meetings are often unproductive.
blind spot bias
failing to recognize your own cognitive biases is a bias in itself. People notice cognitive and motivational biases much more in others than in themselves.
Choice supportive ideas
when you choose something you tend to feel postive about it. even if that choice has flaws. Like how you thing your dog is awesome even if it bites someone.
Clustering illusion
This is the tendency to see patterns in random events. It is key to various gambling fallacies, like the idea that red is more or less likely to turn up on a roulette table after a string of reds.
Confirmation bias
We tend to listen only to info that confirms out preconceptions- pne of the many reasons it so hard to have an intelligent conversation about climate change
conservatism bias
where people favor prior evidence over new evidence or info that has emerged. People were slow to accept that the earth was round because they maintained their earlier understanding that the planet was flat
information bias
the tendency to seek info when it does not affect action. More info is not always better. With less info, people can often make more accurate predictions.
Ostrich effect
the decision to ignore dangerous or negative info by buring one head in the sand, like an ostrich. Research suggest that investors check the value of their holding significantly less often during bad markets.
Outcome bias
Judging a decision based on the outcome. Rather that how exactly the decision was made in the moment. Just because you won a lot in vegas doesn’t mean gambling your money was smart decision.
Overconfidence
Some of us are too confident about our abilities, and this cause us to take greater risks in our daily lives. Experts are more prone to this bias than laypeople, since they are more convinces that they are right.
Placebo Effect
when simply believing that something will have a certain effect on you cause it to have that efffect. In medicine, people given fake pills often experience the same physiological effects as people given the real thing.
Pro-innovation bias
When an proponent of an innovation tends to overvalue its usefulness and undervalues its limitations. Sounds familiar, silicon valley?
Recency
The tendency to weigh the latest info more heavily than the older data. Investors often thing the market will always look the way it looks today and make unwise decisions.
