40 terms

Psychology

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Ease of Recall
suggests that if something is more easily recalled in memory it must occur with a higher probability.

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Retrievability
suggests that we are biased in assessments of frequency in part because of our memory structure limitations and our search mechanisms. It's the way we remember that matters.

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Bias from insensitivity to base rates
also called base rate neglect or base rate bias. If presented with related base rate information (i.e. generic, general information) and specific information (information only pertaining to a certain case), the mind tends to ignore the former and focus on the latter.

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Bias from insensitivity to sample size
a cognitive bias that occurs when people judge the probability of obtaining a sample statistic without respect to the sample size. For example, in one study subjects assigned the same probability to the likelihood of obtaining a mean height of above six feet [183 cm] in samples of 10, 100, and 1,000 men. In other words, variation is more likely in smaller samples, but people may not expect this.

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Misconceptions of chance
We tend to believe that the probability of an independent event is lowered when it has happened recently or that the probability is increased when it hasn't happened recently.

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Regression to the mean
the phenomenon that if a variable is extreme on its first measurement, it will tend to be closer to the average on its second measurement—and if it is extreme on its second measurement, it will tend to have been closer to the average on its first.

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Bias from conjunction fallacy
which people commit when they judge a conjunction or two events to be more probable than one of the events in a direct comparison.

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Confirmation bias
the tendency to seek information that confirms prior conclusions and to ignore evidence to the contrary.

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

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Conjunctive and disjunctive-events bias
occurs when it is assumed that specific conditions are more probable than a single general one. According to Daniel Kahneman and his long-time co-author Amos Tversky (1974): "A complex system, such as a nuclear reactor or the human body, will malfunction if any of its essential components fails." They continue, "Even when the likelihood of failure in each component is slight, the probability of an overall failure can be high if many components are involved."

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Bias from over-confidence
People tend to put a higher probability on desired events than undesired events. Most of us believe we are better performers, more honest and intelligent, have a better future, have a happier marriage, are less vulnerable than the average person, etc. But we can't all be better than average.

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Hindsight Bias
occurs when we look backward in time and see events are more predictable than they were at the time a decision was made.

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Bias from incentives and reinforcement
a consequence that will strengthen an organism's future behavior whenever that behavior is preceded by a specific antecedent stimulus. This strengthening effect may be measured as a higher frequency of behavior (e.g., pulling a lever more frequently), longer duration (e.g., pulling a lever for longer periods of time), greater magnitude (e.g., pulling a lever with greater force), or shorter latency (e.g., pulling a lever more quickly following the antecedent stimulus).

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Bias from self-interest
generally refers to a focus on the needs or desires (interests) of the self over others.

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Bias from association
in psychology refers to a connection between conceptual entities or mental states that result from the similarity between those states or their proximity in space or time.

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Bias from liking/loving
humans ignore the faults and flaws of other people, products or companies if there is liking, love or admiration for them.

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Bias from disliking/hating
We also ignore the virtues of those things we dislike and distort the facts to facilitate that hatred while putting on blinders to other options and opinions.

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Commitment and Consistency Bias
Incorrectly remembering one's past attitudes and behavior as resembling present attitudes and behavior. [A] kind of built-in mechanism that makes us feel better after we make crappy decisions, especially at the cash register. Also known as Buyer's Stockholm Syndrome, it's a way of subconsciously justifying our purchases — especially expensive ones.

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Bias from excessive fairness
Life isn't fair, but many can't accept this. Tolerating a little unfairness should be okay if it means a greater fairness for all. The example Munger uses is letting in other drivers on the freeway knowing they will reciprocate in the future.

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Bias from envy and jealousy
having feelings of dislike and competitiveness with someone that is seen physically, or mentally better than yourself.

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Reciprocation bias
a consequence that will strengthen an organism's future behavior whenever that behavior is preceded by a specific antecedent stimulus. This strengthening effect may be measured as a higher frequency of behavior (e.g., pulling a lever more frequently), longer duration (e.g., pulling a lever for longer periods of time), greater magnitude (e.g., pulling a lever with greater force), or shorter latency (e.g., pulling a lever more quickly following the antecedent stimulus).

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Over-influence from authority
can be used to mean the right to exercise the power given by the State (in the form of government, judges, police officers, etc.), or by academic knowledge of an area (someone that can be an authority on a subject).

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Deprival Super-Reaction Bias
When something we like is taken away or threatened to be taken away, we get upset. Taking away people's freedom, status, money or anything they value will result in Deprival Super Reaction

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Bias from contrast
The tendency to mentally upgrade or downgrade an object when comparing it to a contrasting object.

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Bias from stress-influence
Adrenaline tends to produce faster and more extreme reactions. Some stress can improve performance but heavy stress often leads to dysfunction.

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Bias from emotional arousal
Our everyday surroundings besiege us with information. The battle is for a share of our limited attention and memory, with the brain selecting the winners and discarding the losers. This can lead to making poor decisions.

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Bias from physical or psychological pain
a specific subgroup of empathy that involves recognizing and understanding another person's pain. Empathy is the mental ability that allows one person to understand another person's mental and emotional state and how to effectively respond to that person. When a person receives cues that another person is in pain, neural pain circuits within the brain are activated.

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Fundamental Attribution Error
the tendency for people to place an undue emphasis on internal characteristics (personality) to explain someone else's behavior in a given situation rather than considering the situation's external factors.

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Bias from the status quo
a preference for the current state of affairs.

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Do something tendency
People have a tendency to take action.

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Do nothing tendency
Choice is often difficult, and decision makers may prefer to do nothing and ⁄ or to maintain their current course of action because it is easier. Status quo alternatives often require less mental effort to maintain

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Over-influence from precision/models
Models are going to flawed and have exceptions. For example, economic models assume that consumers act rationally and we know that they often don't

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Uncertainty avoidance
a society's tolerance for uncertainty and ambiguity. It reflects the extent to which members of a society attempt to cope with anxiety by minimizing uncertainty.

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Not invented here bias
a stance adopted by social, corporate, or institutional cultures that avoid using or buying already existing products, research, standards, or knowledge because of their external origins and costs.

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Short-term bias
Some decisions must be made repeatedly and have consequences that change depending on how often each alternative is chosen. Such temporally extended decisions are pervasive and important, and often involve short-term/long-term tradeoffs.

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Tendency to avoid extremes
being more likely to choose an option if it is the intermediate choice.

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Man with a Hammer Tendency
an over-reliance on a familiar tool; as Abraham Maslow said in 1966, "I suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail."

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Bias from social proof
phenomenon where people assume the actions of others in an attempt to reflect correct behavior for a given situation. This effect is prominent in ambiguous social situations where people are unable to determine the appropriate mode of behavior and is driven by the assumption that surrounding people possess more knowledge about the situation.

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Over-influence from framing effects
people react to a particular choice in different ways depending on how it is presented; e.g. as a loss or as a gain. People tend to avoid risk when a positive frame is presented but seek risks when a negative frame is presented. Gain and loss are defined in the scenario as descriptions of outcomes (e.g. lives lost or saved, disease patients treated and not treated, lives saved and lost during accidents, etc.).

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Lollapalooza
for multiple biases, tendencies or mental models acting at the same time in the same direction. With the Lollapalooza effect, itself a mental model, the result is often extreme, due to the confluence of the mental models, biases or tendencies acting together, greatly increasing the likelihood of acting irrationally.

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