Cognitive Biases in Economics

The subfield of economics that applies psychological insights into human behavior and to explain economic decision making

• Behavioral Economics

• Cognitive Bias

• Confirmation Bias

• Endowment Effect

A subconscious error in thinking that leads to irrational decision making

• FOMO (Fear of Missing Out)

• Cognitive Bias

• Confirmation Bias

• Endowment Effect

The tendency to search for information that supports our preconceptions and to ignore or distort contradictory evidence

• FOMO (Fear of Missing Out)

• Hedonic Adaptation

• Confirmation Bias

• Endowment Effect

The tendency to put more value on things you already own

• FOMO (Fear of Missing Out)

• Hedonic Adaptation

• Herd Mentality

• Endowment Effect

The tendency to feel anxiety/fear that an exciting or interesting event may currently be happening elsewhere, often aroused by posts seen on a social media website

• FOMO (Fear of Missing Out)

• Hedonic Adaptation

• Herd Mentality

• Loss Aversion

The tendency to return to a baseline level of happiness regardless of whether you go through a positive or negative experience or event

• Overconfidence Bias

• Hedonic Adaptation

• Herd Mentality

• Loss Aversion

The tendency to conform to the behaviors and beliefs of the people around you

• Overconfidence Bias

• Overestimation

• Herd Mentality

• Loss Aversion

The tendency to regard losses as considerably more important than gains of comparable magnitude

• Overconfidence Bias

• Overestimation

• Overnight Test

• Loss Aversion

The tendency people have to be more confident in their own abilities

• Overconfidence Bias

• Overestimation

• Overnight Test

• Overplacement

A strategy used to combat loss aversion by imagining that overnight something you own has been replaced with cash, then determining whether you would prefer to keep the cash or buy the item back

• Overprecision

• Social Media Marketing

• Overnight Test

• Overplacement