We're pretty good at convincing ourselves that those flashy, useless, badly thought-out purchases are necessary after all.
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We surround ourselves with it: We tend to like people who think like us; if we agree with someone's beliefs, we're more likely to be friends with them.
This makes sense, but it means that we subconsciously begin to ignore or dismiss anything that threatens our world views
It's a thinking mistake and it occurs when we confuse selection factors with results.
Professional swimmers don't have perfect bodies because they train extensively. Rather, they are good swimmers because of their physiques.
It plays on this tendency of ours to emphasize loss over gain.
The term sunk cost refers to any cost that has been paid already and cannot be recovered. The reason we can't ignore the cost, even though it's already been paid, is that we're wired to feel loss far more strongly than gain.
It is a glitch in our thinking that occurs when we place too much weight on past events, believing that they will have an effect on future outcomes.
This is when we mistakenly think that eventually, our luck has to change for the better.
Somehow, we find it impossible to accept bad results and give up—we often insist on keeping at it until we get positive results, regardless of what the odds of that happening actually are.
It essentially works like this: rather than making a decision based on pure value for investment (time, money, etc.), we factor in comparative value—that is, how much value an option offers when compared to another option.
We believe our memories more than facts. Our memories are highly fallible and plastic. And yet, we tend to subconsciously favor them over objective facts.
Don't base a factual decision on your gut instinct without at least exploring the data objectively first.
The “fundamental attribution error,” is when we excuse our own mistakes but blame other people for theirs.
Give other people the chance to explain themselves before judging their behavior.
The way to calculate the opportunity cost is to subtract the value of the option from the value of the alternative that is foregone.
Opportunity Cost = Return on the best foregone alternative - Return on the chosen option.
Focus on problem solving, such as doing a crossword puzzle, bookkeeping, responding to business emails, or other such emotionally neutral activity.