Ch1 Financial Attitudes and Behaviors

Describes the common human tendency to rely too heavily on the first piece of information offered (the "anchor") when making decisions.

• Anchoring Effect

• Confirmation Bias

• Availability Heuristic

• Framing Effect

BNPL is a type of installment loan that divides your purchase into four equal payments, with the first due at checkout. The remaining payments are billed to your debit, credit card or bank account until your purchase is paid in full.

• Buy Now, Pay Later

• Pay in Advance

• Credit Card Loan

• Deferred Payment Plan

The way a particular person understands events, facts, and other people, based on their own set of beliefs and experiences and may not be reasonable or accurate.

• Cognitive Biases

• Empirical Evidence

• Logical Reasoning

• Objective Analysis

The ability to delay an impulse for an immediate reward to receive a more favorable reward later.

• Delayed Gratification

• Instant Gratification

• Impulse Buying

• Emotional Reasoning

Describes a circumstance in which an individual places a higher value on an object that they already own than the value they would place on that same object if they did not own it.

• Endowment Effect

• Confirmation Bias

• Anchoring Effect

• Availability Heuristic

The tendency of the people in a group to think and behave in ways that conform with others in the group rather than as individuals.

• Herd Mentality

• Critical Thinking

• Individualism

• Analytical Reasoning

A mental shortcut commonly used to simplify problems and avoid cognitive overload.

• Heuristics

• Algorithms

• Biases

• Schemas

The temptation, and resulting tendency, to forego a future benefit to obtain a less rewarding but more immediate benefit.

• Immediate Gratification

• Delayed Response

• Long-term Planning

• Deferred Satisfaction

People tend to adopt certain behaviors, styles, or attitudes simply because others are doing so.

• Joining the Cause Effect

• Confirmation Bias

• Anchoring Effect

• Recency Effect

A cognitive bias that describes why, for individuals, the pain of losing is psychologically twice as powerful as the pleasure of gaining.

• Loss Aversion

• Confirmation Bias

• Anchoring Effect

• Availability Heuristic