Two psychologists ended up unlocking important keys to both the mind and to economics. Amos Tversky and Daniel Kahneman created the field of behavioral economics and revolutionized cognitive psychology with the discovery of a set of cognitive and psychological biases that affect our decision-making abilities.
These systematic errors in our thinking and logic affect our everyday choices, behaviors, and evaluations of others. For more on this topic, please also see the Cognitive Distortions and Logical Fallacies data sets.
Heuristics: Mental shortcuts
Psychological biases are often the result of heuristics, which are mental shortcuts that help people make decisions quickly, but sometimes at the expense of accuracy.
One of the most well-known biases is confirmation bias, which is the tendency to search for, interpret, and remember information in a way that confirms one’s pre-existing beliefs or hypotheses. This can lead individuals to ignore or dismiss evidence that challenges their views.
Another common bias is the anchoring effect, where individuals rely too heavily on an initial piece of information, known as the “anchor,” when making decisions. For example, if you are told that a shirt is on sale for $50, down from $100, you might perceive it as a good deal, even if the shirt is not worth $50.
The availability heuristic is a mental shortcut that leads people to overestimate the likelihood of events that are easily recalled. For instance, if someone recently heard about a plane crash, they might overestimate the dangers of flying, even though statistically, it is much safer than driving.
The Dunning-Kruger effect is a cognitive bias where individuals with low ability at a task overestimate their ability. Essentially, they are not skilled enough to recognize their own incompetence. On the flip side, highly competent individuals may underestimate their relative competence.
The halo effect is a type of bias where the perception of one positive trait of a person or thing influences the perception of other traits. For example, if someone is physically attractive, they are often perceived as more intelligent, talented, or kind.
Loss aversion is the tendency to prefer avoiding losses over acquiring equivalent gains. People are generally more upset about losing $20 than they are happy about gaining $20. This bias can lead to risk-averse behavior.
The bandwagon effect refers to the tendency of people to align their beliefs and behaviors with those of a group. This can be seen in various social phenomena such as fashion trends and political movements.
The hindsight bias is the inclination to see events as being more predictable after they have happened. People often believe that they βknew it all along,β which can create overconfidence in their ability to predict events.
These are just a handful of the full list of 30 psychological biases detailed below in the dictionary table. Arm yourself with awareness of these biases, as striving to think critically can help in making more rational and informed decisions.
Psychological biases dictionary
Read More:
Cognitive distortions are bad mental habits and unhelpful ways of thinking that can limit one’s ability to function in the world.
Recognizing and avoiding logical fallacies is essential for critical thinking and effective communication.
