Psychology of Bias and Heuristics

Prospect Theory

• Describes how people make decisions involving risk and uncertainty, focusing on potential losses and gains.
• Emphasizes that losses have a greater emotional impact than an equivalent amount of gains, leading to risk-averse behavior.

The Intelligence Paradox

• Suggests that high cognitive abilities do not always correlate with sound judgment or decision-making.
• Intelligence may not fully compensate for cognitive biases that influence behavior.

Availability Heuristic

• A mental shortcut that relies on immediate examples that come to mind when evaluating a specific topic, concept, method, or decision.
• Can lead to errors in judgment based on the prominence or frequency of recalled events.

Attentional Bias

• The tendency to focus selectively on certain stimuli while ignoring others, influencing perceptions and decisions.
• Often reflects personal expectations or emotional states, affecting how information is processed.

The Illusory Truth Effect

• Occurs when repeated statements are perceived as more truthful, regardless of their actual veracity.
• Demonstrates the power of repetition in shaping beliefs and perceptions.

The Mere-Exposure Effect

• Suggests individuals tend to develop a preference for things merely because they are familiar with them.
• Increased exposure can enhance positive feelings towards people, objects, or ideas.

Mood Congruent Bias

• Refers to the tendency to recall memories that match one's current mood or emotional state.
• Affects how individuals interpret new information based on their emotional context.

Baader-Meinhof Phenomenon

• Also known as frequency illusion, it describes the phenomenon where an individual starts noticing something more frequently after first encountering it.
• Highlights how a person's focus can alter their perception of reality.

Empathy Gap

• A cognitive bias that underestimates the influence of emotional states on one's decisions and behaviors.
• Can lead to misjudgments about how one will feel or act in future emotional situations.

Omission Bias

• The tendency to judge harmful actions as worse than equally harmful inactions.
• Reflects a preference for inaction over action in ethical dilemmas based on perceived moral responsibility.

Von Restorff Effect

• The phenomenon where an item that stands out is more likely to be remembered than ordinary items.
• Emphasizes the importance of differentiation in memory retention and recall.

Focusing Effect

• Occurs when individuals place excessive weight on one aspect of an event while neglecting others, leading to skewed evaluations.
• Can influence decision-making by prioritizing certain information over a more comprehensive view.

Framing Effect

• Describes how the way information is presented can significantly influence decision-making and judgment.
• Differentiate outcomes based on whether the information is framed in positive or negative terms.

Weber-Fechner Law

• A principle in psychophysics that explains the relationship between stimulus magnitude and perceived intensity.
• Suggests that perceived changes in a stimulus correspond to the logarithm of its actual change.

Confirmation Bias

• The tendency to search for, interpret, and remember information in a way that confirms one’s preexisting beliefs or hypotheses.
• Can perpetuate misinformation and hinder objective analysis of evidence.

Semmelweis Reflex

• A metaphor for the social tendency to reject new evidence or knowledge that contradicts established norms or beliefs.
• Illustrates how new ideas can be dismissed even when they are scientifically valid.

Bias Blind Spot

• The inability to recognize one's own biases while being able to identify biases in others.
• Highlights the challenges in achieving self-awareness and objective reasoning.

Clustering Illusion

• The perception that random patterns or clusters exist in data, suggesting an order that isn’t really there.
• Affects how people interpret statistics and probability.

Naive Realism

• The belief that one perceives the world objectively and that those who see things differently are uninformed or biased.
• Underlines the challenges in resolving conflicts due to differing perceptions.

Gambler's Fallacy

• The mistaken belief that past random events affect the probabilities of future random events.
• Commonly occurs in gambling contexts where players assume trends will continue.

Hot-Hand Fallacy

• The belief that a person who experiences success with a random event has a greater chance of further success in additional attempts.
• Often seen in sports and betting scenarios.

The Bandwagon Effect

• Refers to the phenomenon where individuals adopt certain behaviors or beliefs because many others are doing the same.
• Can lead to groupthink and conformity.

Zero-Sum Bias

• A belief that a situation is a zero-sum game, where one person's gain is inherently another's loss.
• Affects competitive dynamics and negotiation strategies.

Hindsight Bias

• Describes the inclination to see events as having been predictable after they have already happened.
• Can distort memory and learning processes.

Outcome Bias

• The tendency to judge a decision based on its outcome rather than on the quality of the decision at the time it was made.
• Undermines objective evaluation of choices.

Restraint Bias

• The overestimation of one’s capacity to resist temptation, leading to poor long-term decision-making.
• Commonly associated with impulsive behavior in various contexts.

Overconfidence Effect

• A cognitive bias that leads individuals to overestimate their own abilities, knowledge, or predictions.
• Often seen in fields ranging from finance to personal assessments.

Dunning-Kruger Effect

• A cognitive bias in which individuals with low ability overestimate their skills, while those with high ability underestimate theirs.
• Highlights challenges in self-assessment and awareness.

Peltzman Effect

• The concept that safety measures can lead to riskier behavior because individuals feel more secure.
• Explains potential unintended consequences of regulations or safety interventions.

Hyperbolic Discounting

• A behavioral economics concept where individuals prefer smaller, immediate rewards over larger, delayed rewards.
• Influences decision-making in contexts like savings and investments.

Sunk Cost Fallacy

• A reasoning error where individuals continue an endeavor once an investment in money, effort, or time has been made, regardless of future outcome.
• Can lead to irrational decision-making.

Irrational Escalation

• A pattern where individuals continue on a failing course of action because of previously invested resources.
• Related to the sunk cost fallacy.

Zero Risk Bias

• The preference for reducing small risks to zero even when greater risks remain unchanged.
• Reflects the human inclination towards certainty in risk management.

The Disposition Effect

• The tendency to sell assets that have increased in value while keeping assets that have dropped in value.
• Influences investor behavior and market dynamics.

Pseudo-certainty Effect

• The tendency to prefer certain outcomes over probable ones when the perceived values are the same, even if probabilities differ.
• Influences risk-taking behaviors in uncertain situations.

Backfire Effect

• The phenomenon where individuals strengthen their existing beliefs when presented with contrary evidence.
• Demonstrates challenges in changing opinions and belief systems.

Reverse Psychology

• A tactic where positive outcomes are achieved by advocating the opposite of what one truly desires, relying on contrarian behavior.
• Often employed in behavioral interventions.

The Less-Is-Better Effect

• The notion that people may prefer smaller quantities of a product or experience if they perceive it as higher quality, despite having the option for larger quantities.
• Impacts consumer choices and marketing strategies.

Prospect Theory

• Describes how people make decisions based on potential losses and gains relative to a reference point, rather than final outcomes.
• Individuals exhibit loss aversion, valuing losses more than equivalent gains, leading to risk-averse behavior when facing potential gains and risk-seeking behavior when facing potential losses.

The Intelligence Paradox

• Refers to the observation that higher IQ does not always correlate with better decision-making or practical intelligence.
• Highlights the discrepancy between cognitive ability and real-world performance, suggesting that emotional and social factors play critical roles in intelligence applications.

Availability Heuristics

• A cognitive shortcut where individuals judge the probability of events based on how easily examples come to mind.
• Often leads to overestimation of risks associated with dramatic events (like plane crashes) while underestimating more common risks (like car accidents).

Attentional Bias

• The tendency to focus on certain stimuli while ignoring others, which can distort perception and decision-making.
• Can be influenced by personal experiences, expectations, and social context, leading to selective attention to information that confirms pre-existing beliefs.

The Illusory Truth Effect

• The phenomenon in which repeated exposure to a statement increases the likelihood of it being perceived as true.
• Even false information can become more believable when it is presented multiple times.

The Mere-Exposure Effect

• A psychological phenomenon where repeated exposure to a person, object, or idea leads to increased liking.
• Based on the principle that familiarity breeds comfort, influencing preferences in various domains, such as advertising and relationships.

Mood Congruent Bias

• The tendency to recall memories or information that is consistent with one’s current mood or emotional state.
• This bias can affect decision-making and perceptions, leading individuals to interpret events in a way that aligns with their emotional feelings.

Baader Meinhof Phenomenon

• Also known as frequency illusion; occurs when someone learns about something new and then starts noticing it everywhere.
• Reflects the brain's selective attention and cognitive biases, creating an illusion of increased occurrence.

Empathy Gap

• A cognitive bias where individuals underestimate the influence of emotional states on their own and others' decision-making processes.
• Leads to difficulties in understanding the emotional responses of others, especially when in a different emotional state.

Omission Bias

• A tendency to judge harmful actions as worse than equally harmful inactions, leading to a preference for the status quo.
• This bias can affect moral decision-making, promoting inaction over action in situations with potential harm.

Von Restorff Effect

• A cognitive phenomenon where an item that stands out is more likely to be remembered than similar items.
• Also known as the isolation effect, it highlights the importance of distinctive features in memory retention.

Focusing Effect

• The tendency to place excessive importance on one aspect of an event while ignoring other relevant factors.
• Can lead to skewed perceptions of reality, often influencing judgments or decisions disproportionately.

Framing Effect

• How information is presented (the “frame”) significantly affects decisions and judgments.
• Different wording or context can lead to different interpretations and choices, demonstrating the power of subtle cues.

The Weber-Fechner Law

• Describes the relationship between stimulus and perception; as stimuli increase, the perceived change must also increase to maintain a constant perception.
• Fundamental in understanding sensory perception and psychological thresholds.

Confirmation Bias

• The tendency to search for, interpret, and remember information in a way that confirms one’s preexisting beliefs.
• Leads individuals to overlook or dismiss contradictory evidence, reinforcing erroneous conclusions.

Semmelweis Reflex

• The rejection of new evidence or new knowledge that contradicts established norms or beliefs.
• Named after Ignaz Semmelweis, whose discoveries about handwashing were initially dismissed by the medical community.

Bias Blind Spot

• The inability to recognize one’s own biases while being able to identify biases in others.
• This cognitive bias can lead to overconfidence in one's judgments and decisions.

Clustering Illusion

• The perception of patterns in random data, causing people to see meaningful groupings or trends where none exist.
• Common in gambling and finance, leading to faulty interpretations of chance events.

Naive Realism

• The belief that we perceive the world objectively, and that those who disagree with us must be uninformed or biased.
• This bias can contribute to polarization in opinions and conflicts in communication.

Gambler's Fallacy

• The mistaken belief that past random events can influence future ones, leading individuals to make erroneous bets.
• Example: believing that a series of losses increases the chance of a win in games of chance, despite each event being independent.

Hot-Hand Fallacy

• The belief that a person who experiences success has a greater chance of continued success in future similar attempts.
• Common in sports contexts, where players are presumed to be 'on fire' after a series of successful performances.

The Bandwagon Effect

• The phenomenon where people adopt beliefs or behaviors because they perceive that others are doing so.
• Often seen in trends, social movements, and political opinions, leading to conformity and groupthink.

Zero-Sum Bias

• The belief that one person's gain is inherently another person's loss, leading to competitive and often destructive behaviors.
• This mindset can hinder cooperation and promote conflict in negotiations and group dynamics.

Hindsight Bias

• The inclination to see events as having been predictable after they have already happened.
• Often described as the “I-knew-it-all-along” effect, it can distort personal perception of decision-making.

Outcome Bias

• Judging a decision based on its outcome rather than the quality of the decision at the time it was made.
• Can lead to skewed evaluations of actions and discourage risk-taking, impacting learning and future decisions.

Restraint Bias

• The tendency to overestimate one's ability to resist temptation or to control impulses in the future.
• This bias can affect planning and self-control, often leading to unexpected failures in managing desires.

Overconfidence Effect

• A cognitive bias in which an individual’s subjective confidence in their judgments is greater than their objective accuracy.
• Often leads to overestimation of knowledge, abilities, and chances of success.

Dunning-Kruger Effect

• A phenomenon where individuals with low ability at a task overestimate their competence, while those with high ability underestimate it.
• Demonstrates a disconnect between self-perception and actual skill level.

Peltzman Effect

• The theory that safety measures lead to increased risk-taking behavior because people feel more secure.
• Suggests that people's responses to risk can be adaptive and context-dependent.

Hyperbolic Discounting

• A cognitive bias that describes the tendency to prefer smaller, immediate rewards over larger, delayed rewards.
• Highlights how people struggle with making long-term decisions in favor of immediate gratification.

Sunk Cost Fallacy

• The inclination to continue an endeavor once an investment in money, effort, or time has been made, despite potential losses.
• This fallacy demonstrates how past investments can lead to irrational decision-making.

Irrational Escalation

• The commitment to a failing course of action due to previously invested resources, despite evidence indicating that the decision is unwise.
• Often seen in business contexts, leading to further losses instead of cutting losses.

Zero Risk Bias

• The preference for completely eliminating a risk rather than reducing it, even if the alternative reduction offers greater overall safety.
• This bias can lead to suboptimal decision-making in risk management.

The Disposition Effect

• Investors’ tendency to sell assets that have increased in value while holding onto those that have decreased, leading to suboptimal investment strategies.
• Influenced by emotional attachments and loss aversion.

Pseudo-certainty Effect

• A bias where people perceive certain outcomes in uncertain situations as more certain than they actually are.
• Often leads to suboptimal decision-making under uncertainty, favoring perceived certainties.

Backfire Effect

• A cognitive bias where individuals respond to disconfirming evidence by strengthening their beliefs.
• This effect illustrates how deep-seated beliefs can lead to the negation of contrary facts, perpetuating misinformation.

Reverse Psychology

• A persuasion technique where one advocates for the opposite of what they want to encourage a desired behavior through reactance.
• Often used in persuasion and motivational contexts to elicit compliance indirectly.

The Less-Is-Better Effect

• A paradoxical phenomenon where individuals prefer a smaller quantity of a desirable item over a larger quantity, often due to perceived quality.
• Demonstrates complexities in consumer behavior and decision-making preferences.

Cognitive Biases and Theories

• Prospect Theory: Describes how people make decisions in uncertain conditions, emphasizing loss aversion where losses weigh heavier than gains.
• The Intelligence Paradox: Highlights that higher intelligence does not always lead to better decision-making, particularly under emotional influence.
• Availability Heuristics: A mental shortcut that relies on immediate examples that come to mind, which can skew perceptions of probability and frequency.
• Attentional Bias: Refers to the tendency to focus on certain stimuli while ignoring others, often influenced by emotional states or previous experiences.

Psychological Effects

• Illusory Truth Effect: States that repeated exposure to a statement increases the likelihood of it being perceived as true, regardless of actual accuracy.
• Mere-Exposure Effect: Suggests that people tend to develop a preference for things merely because they are familiar with them.
• Mood Congruent Bias: Involves the tendency to remember information that aligns with one's current mood, which can distort judgments and perceptions.

Phenomena and Cognitive Patterns

• Baader-Meinhof Phenomenon: The experience of suddenly noticing something more often after being exposed to it for the first time, leading to a perception of increased frequency.
• Empathy Gap: Describes the inability to accurately predict emotional responses in oneself or others in different circumstances.
• Omission Bias: Tendency to judge harmful actions (active choices) as worse than equally harmful omissions (failures to act).

Memory and Perception Effects

• Von Restorff Effect: Highlights that an item that stands out is more likely to be remembered than other items that are similar.
• Focusing Effect: Describes the overemphasis on a particular feature while underestimating the impact of other factors in decision-making.
• Framing Effect: Explains how presenting information in different formats can dramatically influence perception and decision-making.

Psychological Laws and Biases

• Weber-Fechner Law: Relates to the perception of change in a stimulus, where the perceived change is proportional to the logarithm of the actual change.
• Confirmation Bias: Involves favoring information that confirms one’s preexisting beliefs, leading to misinterpretation of evidence.

Decision-Making Fallacies

• Semmelweis Reflex: Describes the tendency to reject new evidence that contradicts established norms or theories.
• Bias Blind Spot: The inability to recognize one's own cognitive biases while being able to identify biases in others.
• Clustering Illusion: The perception of patterns in random data, leading to misconceptions about relationships.

Realism and Gambling Biases

• Naive Realism: Belief that one perceives the world objectively, while others are biased or misled.
• Gambler's Fallacy: Incorrect belief that future probabilities are altered by past events in a random sequence.
• Hot-Hand Fallacy: The belief that a person who has been successful in a random event has a greater chance of further success.

Social and Cognitive Biases

• Bandwagon Effect: The tendency to adopt behaviors or beliefs because others are doing so, reinforcing social conformity.
• Zero-Sum Bias: A tendency to perceive a situation as a zero-sum game, where one party's gain is exactly balanced by losses from another party.

Retrospective and Predictive Biases

• Hindsight Bias: The inclination to see events as having been predictable after they have already occurred, leading to overconfidence in one's ability to foresee outcomes.
• Outcome Bias: Evaluating a decision based on its outcome rather than the quality of the decision at the time it was made.

Cognitive Overestimations and Fallacies

• Restraint Bias: Underestimating one's ability to control impulses, leading to poor decision-making.
• Overconfidence Effect: The tendency to overestimate knowledge or predictive capabilities, often resulting in taking undue risks.
• Dunning-Kruger Effect: Cognitive bias where individuals with low ability at a task overestimate their ability.

Economic and Decision-Making Biases

• Peltzman Effect: Describes how people may take greater risks if they perceive safety measures are in place.
• Hyperbolic Discounting: Preference for smaller, immediate rewards over larger, delayed rewards, leading to inconsistent decision-making over time.
• Sunk Cost Fallacy: The inclination to continue an endeavor once an investment in money, effort, or time has been made, leading to irrational decision-making.

Additional Biasing Effects

• Irrational Escalation: Continuing a course of action despite negative outcomes due to prior commitments.
• Zero Risk Bias: Preference for reducing risk to zero, even if it means forgoing larger potential benefits.
• Disposition Effect: Tendency to sell assets that have increased in value while keeping assets that have dropped in value, driven by loss aversion.
• Pseudo-certainty Effect: Preference for a certain outcome over a probabilistic one, even when the latter has higher expected value.

Behavioral Insights

• Backfire Effect: When individuals encounter contradictory evidence, they strengthen their original beliefs instead of changing their minds.
• Reverse Psychology: Influencing someone to do something by suggesting the opposite, leveraging reactance theory.
• Less-Is-Better Effect: Individuals may perceive a smaller option as more valuable than a larger one when the smaller option is presented as unique or exclusive.

Explore various psychological phenomena such as prospect theory, availability heuristics, and biases that influence decision-making. This quiz covers concepts like the illusory truth effect, framing effect, and more, providing insights into human cognition and behavior. Test your knowledge on how these biases shape our perceptions and judgments.