adaptive attitudes
We develop the same attitudes as people we associate with.
ambiguity bias
A cognitive heuristic in which decisions are made based on an initial 'anchor'. Our decisions are influenced by input that seems to suggest the correct answer.
assimilation error
We misinterpret information that we receive so that it seems to confirm what we have done.
attachment bias
attribution theory
A general theoretical perspective in social psychology concerned with the issue of social perception.
A cognitive heuristic in which a decision-maker relies upon knowledge that is readily available rather than examining other alternatives or procedures.
A psychological school of thought that focuses on the study of the environmental conditions that cause an individual to behave in particular way. The school was founded by John B. Watson in 1913.
break-even effect
certainty effect
We prefer a sure gain from a much larger gain that is very likely but not certain. This makes us close winning positions even if we think that they are likely to get even better.
cognitive dissonance
An emotional state set up when two simultaneously held attitudes or cognitions are inconsistent or when there is a conflict between belief and overt behaviour. Cognitive dissonance occurs when evidence shows that our assumptions have been wrong. We try to avoid such information, or distort it, and we try to avoid action that highlights the dissonance.
cognitive heuristic
[see] heuristic, cognitive
confirmation bias/confirmatory bias
The tendency to seek and interpret information that confirms existing beliefs. Our conclusions are unduly biased by what we want to believe.
conservatism bias
The general meaning derives from the Latin for to render impure.
context dependence
disposition effect
ego defence
The process of harbouring the libidinal energies of the id in defence of the ego.
Ego-defensive attitudes
We adapt our attitudes so that they seem to confirm the decisions we have already made.
endowment effect
expected utility theory
false-consensus effect
The tendency to overestimate the degree to which one's opinions and beliefs are shared by others. We generally overestimate the number of other people that agree with our attitudes.
A cognitive heuristic in which people tend to reach conclusions based on the 'framework' within which a situation is presented; e.g. people are more lokely to recommend the use of a new procedure if it is described as having a '50% success rate' than a '50% failure rate'.
Framing effect
The fact that a market is rising creates a framework through which economic information is interpreted. This effect may of course take place when economic information is reviewed in the context of a bull market.
Gestalt psychology
A school of psychology founded in Germany in the 1910s.
group decision
A decision made by a group.
A method for discovery, a procedure for solving a problem, a technique that operates as a vehicle for creative formulation.
heuristic, cognitive
A term generally reserved for any of the various heuristics that people use when making decisions, solving problems and forming beliefs.
hindsight bias
The tendency, after an event has occured, to think that we knew what was going to happen beforehand. We overestimate the likeliness that we would have been able to predict the outcome of a past series of events.
house-money effect
illusion of control
The belief that one has more control over events than one actually does.
illusion of knowledge
knowledge attitudes
We chunk data into manageable clusters, each of which is processed as a simple attitude.
magical thinking
The belief that thinking is equated with doing. We think that a certain behaviour leads to a desired effect, even when we know of no explanation and when there is in fact none.
An element of a culture or system of behaviour that may be considered to be passed from one individual to another by non-genetic means, especially imitation.
memory and hindsight biases
mental accounting
mental compartments
We divide phenomena into different departments and try to optimize each department rather than the whole.
overconfident behaviour
We overestimate our ability to make correct decisions.
persuasion effect
We are more persuaded by a credible source than by a credible argument. We are more persuaded by a credible source than by a credible argument. People may see prices as very credible sources of information about the economic value of financial instruments. They may thus be more convinced by the price as a source than by arguments that tell them why the prices are wrong
Flexibility, modifiability, malleability, adaptability, teachability, etc.
prospect theory
A perspective on decision making based on the assumption that people typically show risk aversion; hence, when making decisions they view whatever losses may be involved as more painful than equivalent gains are desirable. We have an irrational tendency to be less willing to gamble with profits than with losses.
regret theory
We try to avoid actions that confirm that we have made mistakes.
A cognitive heuristic in which decisions are made based on how representative a given individual case appears to be independent of other information about its actual likelihood. We tend to think that trends we observe are likely to continue. Looking at a price trend and concluding that it will continue simply because it is there may of course be a powerful example of representativeness.
risk aversion
The general tendency to be afraid of taking risks even when they also carry substantial potential gain.
Distinctiveness, prominence, obviousness.
selective exposure
We try to expose ourselves only to information that seems to confirm our behaviour and attitudes.
selective perception
We misinterpret information in a way that seems to confirm our behaviour and attitudes.
self-fulfilling prophecy
A term used to refer to the fact that frequently things turn out just as one expected (or prophesied) that they would -- not necessarily because of one's prescience but because one behaved in a manner that optimized these very outcomes.
The process by which people change their attitudes and beliefs in response to their own behaviours.
Self-persuasion effect
When realities are in conflict with our attitudes we change the attitudes rather than accepting the realities.
More or less nontechnically, the fulfillment of one's potential.
Self-realizing attitudes
We do something because it makes us feel that we are something.
social comparison
The use of others as a basis for comparison in evaluating one's own judgements, abilities, attitudes, etc.
We use the behaviour of others as our source of information about a subject that we find difficult to interpret.
Pertaining to the body.
Somatic marker theory
Strong threats create body reactions that reinforce sustained panic.
status quo bias
sunk-cost effect
touchy-feely syndrome
We overvalue things that we have selected personally.