Chapter 9 Flashcards
Heuristic
Cognitive short cut or ‘rule of thumb’, allowing for quick decision-making and judgement
Cognitive bias
A particular situation in which mental heuristics introduce a predictable distortion into our assessment of a situation, resulting in a flawed judgement
Affect heuristic
A tendency to use the strength of positive or negative emotional reactions as a decision-making short cut
Availability heuristic
A tendency to be disproportionately influenced by whatever most easily or vividly comes to mind when making a decision or assessing options
Recency bias
A tendency to over-estimate the significance of more recent things, because they come more easily and vividly to mind
Anchoring effect
The ability of a starting value or frame of reference to influence your subsequent judgements, even when it has no relevance to what you’re considering
Focusing effect
The tendency to focus excessively on one striking aspect of something, thus failing to give full consideration to a full range of other relevant factors
Representativeness heuristic
The tendency to be influenced by the plausibility of a story or characterization, at the expense of underlying questions of its probability
Stereotype
A commonly held, simplified and idealized view of the typical characteristics of something or someone of a particular type
Social biases
A general term for instances of bias in our judgments
about other people, groups of people, or social and cultural institutions
Framing effects
The way in which presenting the same scenario in different ways can affect judgement and alter preference, based on perceptions of loss and gain, positive and negative
Re-framing
Deliberately selecting a different way of presenting information in order to challenge the emphasis created by a particular initial framing
Loss aversion
The observation that losses are more painful than equivalent gains, and that people thus tend to be biased towards loss avoidance when making decisions
Prospect theory
An observation-based theory describing how people choose between different degrees of known risk, and between different potential losses or gains
Confirmation bias
The tendency to pay attention only to things that confirm our pre-existing ideas, and to ignore or seek to explain away evidence that contradicts them
The sharpshooter fallacy/clustering illusion
The tendency to see a pattern where none exists, by imposing it after the event on evidence while ignoring whatever doesn’t fit
Just world hypothesis
The belief that everything balances out in the end and that the world is fundamentally arranged in a way that is fair
Coherence effect
The tendency to judge information not by its accuracy or likelihood, but by how internally coherent a story or a worldview it embodies
Sunk cost fallacy
The tendency to continue expending energy on something you are emotionally invested in beyond the point at which it makes sense to abandon it
Dunning–Kruger effect
The tendency of people with little or no ability in
an area to greatly over-estimate their ability, resulting in ignorance breeding unwarranted confidence
Overconfidence effect
The strong tendency for most people – and especially experts outside their domain of expertise – to have excessive faith in their judgements and abilities
Behavioural Economics
The application of psychological insights and methods to economics, exploring through experiment and observation the real- life decisions people make
