Chatper 5

Question 1

Cognitive Behavioural Bias: Over Confidence

Answer 1

Unwarranted faith in one’s intuitive reasoning, judgements and cognitive abilities

Question 2

Cognitive Behavioural Bias: Representativeness

Answer 2

The classification reflex is wrong and produces an incorrect understanding of the new element that often persists and biases future interactions with that element

Question 3

Cognitive Behavioural Bias: Cognitive Dissonance

Answer 3

When presented with information that conflicts with pre-existing beliefs, they usually experience mental discomfort

Question 4

Cognitive Behavioural Bias: Availability Bias

Answer 4

Allows people to estimate the probability of an outcome based on how prevalent or familiar that outcome appears in their lives

Question 5

Emotional Behavioural Bias: Endownment

Answer 5

Placing more value on an asset they hold property right to than on an asset they do not hold property rights to

Question 6

Emotional Behavioural Bias: Loss Aversion

Answer 6

People generally feel a stronger impulse to avoid losses than to aquire gains

Question 7

Emotional Behavioural Bias: Regret Aversion

Answer 7

Avoid making decisions because they fear that whatever they decide will be a bad decision

Question 8

Emotional Behavioural Bias: Status Quo

Answer 8

Emotional bias that predisposes people, when faced with a lot of options, choose to keep things the same