cognitive biases Flashcards
what is price anchoring
price anchoring is when a value is imprinted in our mind as reference point to compare prices to .
what is social norms
when our decisions are influenced by rules society has dictated for e.g tipping restaurants
what is availability bias
when we make decisions based on how easy it his for us to find examples , even if the examples completely inflate the real probability of that thing actually happening
for e.gi a shark attack
what is framing
influenced by the way which information is presented to us
what is loss aversion
we don’t like to give things up that we value for e.g money
we don’t want to give it up , instead of investing the money into something that could give us more money / utility w don’t want to talk the risk because we don’t like the idea of losing It , even iff the chances of loss is very low and gain is much higher
This can lead to the endowment effect
what is Endowment effect
attaching too much monetary value to something you have than the value they would place on the same object if they did not own it
what is Herd behaviour
we make our decisions based on what other people around us decide
what is choice architecture
our decision is made based on the location or placement of something
The way information is presented to us
e.g the location of salad bars , located at the front or middle of restaurant , you are more likely to get it
what does behavioural economics allow us to understand?
behavioural economics allows us to understand other situations where traditional economics may let us down
what is altruism?
the idea kindness, selflessness where consumers don’t expect anything back
for e.g charity
