20 Cognitive Biases That Screw Up Your Decisions

Vocabulary flashcards defining all 20 cognitive biases covered in the lecture transcript.

Anchoring bias

The tendency to be over-reliant on the first piece of information heard, such as a first salary negotiation offer establishing a range of reasonable possibilities in each person's mind.

Availability heuristic

The tendency to overestimate the importance of information available to a person, such as arguing that smoking is not unhealthy because of knowing someone who lived to 100 and smoked three packs a day.

Bandwagon effect

A powerful form of groupthink where the probability of one person adopting a belief increases based on the number of people who hold that belief.

Blind-spot bias

The bias of failing to recognize your own cognitive biases, while noticing cognitive and motivational biases much more in others than in yourself.

Choice-supportive bias

The tendency to feel positive about something you choose even if that choice has flaws, such as thinking your dog is awesome even if it bites people every once in a while.

Clustering illusion

The tendency to see patterns in random events, which is key to various gambling fallacies like believing red is more or less likely to turn up on a roulette table after a string of reds.

Confirmation bias

The tendency to listen only to information that confirms our preconceptions, making intelligent conversations about topics like climate change difficult.

Conservatism bias

A bias where people favor prior evidence over new evidence or information that has emerged, such as the slow acceptance of a round Earth due to maintaining an earlier flat-planet understanding.

Information bias

The tendency to seek information when it does not affect action, despite people often being able to make more accurate predictions with less information.

Ostrich effect

The decision to ignore dangerous or negative information by "burying" one's head in the sand, such as investors checking holding values significantly less often during bad markets.

Outcome bias

Judging a decision based on the outcome rather than how exactly the decision was made in the moment.

Overconfidence

Being too confident about one's abilities, causing greater risks in daily life; experts are more prone to this than laypeople because they are more convinced they are right.

Placebo effect

When simply believing that something will have a certain effect on you causes it to have that effect, such as fake pills causing identical physiological effects as real medicine.

Pro-innovation bias

When a proponent of an innovation tends to overvalue its usefulness and undervalue its limitations.

Recency

The tendency to weigh the latest information more heavily than older data, leading investors to unwisely assume the market will always look as it does today.

Salience

The tendency to focus on the most easily recognizable features of a person or concept, such as worrying about being mauled by a lion rather than statistically more likely events like a car accident.

Selective perception

Allowing expectations to influence how we perceive the world, such as opposing team fans observing more infractions from the other team during a football game experiment.

Stereotyping

Expecting a group or person to have certain qualities without having real information about them, allowing quick identification of strangers as friends or enemies.

Survivorship bias

An error stemming from focusing only on surviving examples, leading to misjudgments like assuming entrepreneurship is easy because failed cases are unheard.

Zero-risk bias

The preference for certainty where risk is eliminated entirely to ensure no chance of harm, even if counterproductive.