Groupthink is a psychological phenomenon that occurs when decisions are made due to the unified nature of decision-makers. It happens when the decision-makers strive for unanimity, and this overrides their motivation to consider alternative views. As a result, independent thinking is lost.
As an example consider the bombing of Pearl Harbor. Many of the senior officers at Pearl Harbor did not take warnings from Washington DC about potential invasion seriously despite the fact that Japanese messages had been intercepted. Those who didnt take action believed that the Japanese wouldnt dare to attempt an assault against the U.S. because they would recognize the futility of war with the United States.
Attentional bias is the tendency for peoples perception to be affected by their recurring thoughts at the time.
For example, smokers tend to possess a bias for cigarettes and other smoking-related cues around them, due to the positive thoughts theyve already attributed between smoking and the cues they were exposed to while smoking.
Base rate neglect is the tendency for people to mistakenly judge the likelihood of a situation by not taking into account all relevant data.
Lots of food companies exploit the Base Rate Fallacy on their packaging. When something says "50% extra free," only a third (33%) of what youre looking at is free. If you think half of what youre looking at is free, then youve committed the Base Rate Fallacy. For example, when you buy six cans of Coke labelled "50% extra free," only two of the cans are free, not three. (Its because the original pack had four cans, and 50% of the original amount is two cans.)
In psychology, illusory correlation is the phenomenon of perceiving a relationship between variables (typically people, events, or behaviors) even when no such relationship exists.
This, for exmaple, can occur when people judge whether two events, such as pain and bad weather, are correlated. They rely heavily on the relatively small number of cases where the two events occur together. People pay relatively little attention to the other kinds of observation (of no pain or good weather)
In behavioral economics, projection bias refers to people’s assumption that their tastes or preferences will remain the same over time.
We may have learned from experience not to go to the supermarket when we are hungry – we tend to buy all kinds of junk that we don’t normally eat or want to eat, and not only is our bill higher than normal but we also end up with stuff we don’t consume or don’t want to consume. This happens because at the time of shopping we incorrectly anticipate that our future hunger will be as great as it is now.
The idea that in decision-making, people are limited by the information they have, the cognitive limitations of their minds, and the finite time. As a result, they seek for a “good enough” decision and tend to make a satisficing (rather than maximizing or optimizing) choice.For example, during shopping when people buy something that they find acceptable, although that may not necessarily be their optimal choice.
The Dunning-Kruger effect occurs where people fail to adequately assess their level of competence — or specifically, their incompetence — at a task and thus consider themselves much more competent than everyone else. This lack of awareness is attributed to their lower level of competence robbing them of the ability to critically analyse their performance, leading to a significant overestimation of themselves.
In simple words its "people who are too ignorant to know how ignorant they are".
The denomination effect is a form of cognitive bias relating to currency, suggesting people may be less likely to spend larger currency denominations than their equivalent value in smaller denominations.
The effect occurs because large denominations are regarded as less fungible – that is, psychologically less replaceable with equivalent notes – than smaller denominations, the researchers said.
The Default effect is a tendency to choose the default option when you are given a choice between several ones.
For example, scientific studies carried out regarding the relation of the Default Effect on organ donation found that there are less donors in countries where consent is not given by default. If you are simply put on the organ donor list by default because you haven’t actively expressed that you do not wish to be one then you probably would never even really consider this. Whereas if you were asked to actively give your consent then you would be more prone to start thinking about it in detail and might become more emotionally involved and less likely to agree.
The endowment effect is the bias and perception that the personal ownership of an object exceeds any listed market value.
One of the most famous examples of the endowment effect in the literature is from a study by Daniel Kahneman in which participants were given a mug and then offered the chance to sell it or trade it for an equally valued alternative (pens).
They found that the amount participants required as compensation for the mug once their ownership of the mug had been established ("willingness to accept") was approximately twice as high as the amount they were willing to pay to acquire the mug ("willingness to pay").
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The Barnum effect, also called the Forer effect, is a common psychological phenomenon whereby individuals give high accuracy ratings to descriptions of their personality that supposedly are tailored specifically to them, that are in fact vague and general enough to apply to a wide range of people.
This effect can provide a partial explanation for the widespread acceptance of some paranormal beliefs and practices, such as astrology, fortune telling, aura reading, and some types ofpersonality tests.
Serial-position effect is the tendency of a person to recall the first and last items in a series best, and the middle items worst.
For example, in some study, one participant is given "Steve is smart, diligent, critical, impulsive, and jealous." and the other "Steve is jealous, impulsive, critical, diligent, and smart." These two sentences contain the same information. The first one suggests positive trait at the beginning while the second one has negative traits. Researchers found that the subjects evaluated Steve more positively when given the first sentence, compared with the second one.
A phenomenon in marketing where consumers have a specific change in preference between two choices after being presented with a third choice.
An old Economist advertisement example clearly explains it.
The ad featured three subscription levels: $59 for online only, $159 for print only, and $159 for online and print. Ariely figured out that the option to pay $159 for print only exists so that it makes the option to pay $159 for onlineand print look more enticing than it would if it was just paired with the $59 option.
Functional fixedness is a cognitive bias that limits a person to use an object only in the way it is traditionally used. This bias limits the ability of an individual to use components given to them to complete a task, as they cannot move past the original purpose of those components. For example, if someone needs a paperweight, but they only have a hammer, they may not see how the hammer can be used as a paperweight. Functional fixedness is this inability to see a hammers use as anything other than for pounding nails; the person couldnt think to use the hammer in a way other than in its conventional function.
When tested, 5-year-old children show no signs of functional fixedness. It has been argued that this is because at age 5, any goal to be achieved with an object is equivalent to any other goal. However, by age 7, children have acquired the tendency to treat the originally intended purpose of an object as special.
The Ben Franklin effect is a proposed psychological phenomenon: a person who has already performed a favor for another is more likely to do another favor for the other than if they had received a favor from that person. An explanation for this is cognitive dissonance. People reason that they help others because they like them, even if they do not, because their minds struggle to maintain logical consistency between their actions and perceptions.
The curse of knowledge is a cognitive bias that occurs when an individual, communicating with other individuals, unknowingly assumes that the others have the background to understand.
For example, in a classroom setting, teachers have difficulty teaching novices because they cannot put themselves in the position of the student. A brilliant professor might no longer remember the difficulties that a young student encounters when learning a new subject. This curse of knowledge also explains the danger behind thinking about student learning based on what appears best to faculty members, as opposed to what has been verified with students.
The outcome bias is an error made in evaluating the quality of a decision when the outcome of that decision is already known.
One will often judge a past decision by its ultimate outcome instead of based on the quality of the decision at the time it was made, given what was known at that time. This is an error because no decision maker ever knows whether or not a calculated risk will turn out for the best. The actual outcome of the decision will often be determined by chance, with some risks working out and others not. Individuals whose judgments are influenced by outcome bias are seemingly holding decision makers responsible for events beyond their control.