Cognitive Bias and Heuristics Flashcards
Cognitive Bias
when our thinking is irrational, leading us to make mistakes in judgment and decision making.
- happens because the brain wants to simplify complex information and make quick decisions
Heuristics
mental shortcut that help us decide quickly.
- The brain relies on patterns, past experiences, and simple strategies to find solutions fast.
System 1
fast thinking. Intuitive, automatic, and effortless.
System 2
slow thinking. Deliberate, logical and analytics.
Cognitive Reflection Test
Measure our ability to look past our gut feelings and engage in logic reasoning.
- Test our ability to use system 2
Availability Heuristic
Mental shortcut that relies on immediate examples that come to mind when evaluating a topic, concept, method, or decision.
- Basically, we judge how likely something is based on how easily we can recall examples.
Availability heuristic example; driving vs flying
Availability heuristic could say flying fear is higher because its more extreme, memorable events. However, if someone had a bad driving experience that person’s memory might be even stronger than news stories about plane crashes.
Overconfidence bias
overestimate their abilities and underestimate risk.
Representativeness heuristic
Mental shortcut when we judge the probability of an event based on how similar it is to a prototype/stereotype rather than statistical reasoning. -> Asian in sushi restaurant
Anchoring
The tendency to rely too much on the first piece of information offered, or the most recent information.
Anchoring example; jacket on discount
a jacket is originally 500 but discounted to 300. You believe it’s a great deal, but 300 is still overpriced.
- 500 is your anchor.
Conjunction Fallacy
When we believe that a certain combination of events is more likely than a single, more general event. This, due to the added details being more relatable.
conjunction fallacy example
Linda who used to engage in anti-war campaigns. Is she more likely a bank teller or a bank teller and feminist? People choose b, but the probability of that is actually lower. We prefer a “good story” more than logic.
Base rate neglect
We ignore probabilities (base rates) and focus on one detail based on how much a scenario fits a story rather than the actual likelihood.
- We favor specific information over statistical facts.
Base rate neglect example; Doctors vs bankers
a room has 70% doctors and 30% bankers. A man come out, he used to love finance in his younger age. is he doctor or banker?
- people choose banker as he loved finance. however, its just 30% likely
Hindsight Bias
When we think something that happened was more predictable or obvious after knowing the outcome than it was beforehand.
Hindsight bias example: football game
Before the game: “It could go either way!” - > After game: “I knew they were going to win!”
Halo/Horn effect
Halo: When we draw conclusions about someone based on single characteristics like intelligence, attraction.
Horn: the opposite. rude people seem less attractive.
Conformism
When we adjust our behaviors to align with the group or a group norm, even if they are incorrect or irrational.
- We do it to gain social support, and we believe the group is right.
Scarcity
When we perceive things as more valuable when they are rare, limited, or difficult to obtain.
- Happens as when we feel our freedom is restricted, we want the item even more.
Loss aversion
When people tend to avoid losses way more than acquiring equivalent gains.
Framing effects
How a problem is framed often affect decision making. When framed as a gain, we get risk averse. When framed as loss, we become risk seeking.
- loss frame: “by not entering, we will lose 11%”. people will tend to seek risk.
Prospect theory
A theory focusing on that we value losses more than equivalent gains. We dislike losing 10 more than gaining 10.
