How does confirmation bias affect decision making? How and why do we lie to ourselves through cognitive dissonance? How can cognitive dissonance be reduced? How can bounded rationality be overcome? How to explain indecisiveness through different schools of psychology?
Learning how to make good decisions is crucial for business success. Understand the importance of effective decision-making and prioritize long-term benefits over short-term gains. Be aware of cognitive biases that can derail rational thinking, like confirmation bias and overconfidence bias. Adopt ment...
If you are asking this question, you may already be subject to overconfidence. Feeling that you know more than others or than you actually do is a crucial mistake made by novices to experts alike. As part of human nature, it is safe to assume that you may be exhibiting overconfidence in ...
Mistakes are easy to repeat when there is not a direct consequence to the choice. For example, you may not exercise and eat healthy today, but that later comes back around to harm your health in a decade or two. Another example may be taking a loan out now without considering how to p...
Male German investors are more susceptible to all three biases than females. Young investors (35 years) are more at risk for the herding bias. Investors with a lower experience ( five years). Investors with a high (i.e. university) education are more susceptible to the three ...
How is bounded rationality related to common decision biases? How can bounded rationality be overcome? How can bounded rationality be adaptive? How does counterfactual thinking impact decision making? Why is bounded rationality important? How does groupthink affect decision making?
Bias, emotion, and overconfidence are just three of the many behavioral traits that can lead investors to lose money or achieve lower returns. Behavioral finance, which recognizes that there is a psychological element to all investor decision-making, can help you overcome this obstacle. In "The ...
Several barriers can impede your ability to think critically. Here are some common obstacles and strategies to overcome them: Confirmation Bias Confirmation bias occurs when you favor information that supports your preexisting beliefs. To mitigate this: ...
The underlying goal, though, is to make sure your business is moving forward. That’s why it’s important to define KPIs and establish clear ways to measure the effectiveness of your strategies. Key performance indicators (KPIs) guide you toward your business goals through data. Whether you’...
With this bias, people overestimate their ability to predict an outcome beforehand, even though the information they had at the time would not have led them to the correct outcome. This type of bias happens often in sports and world affairs. Hindsight bias can lead to overconfidence in one’...