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8 Mistakes Our Brains Make Every Day And How To Prevent Them

The anchoring effect

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.

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8 Mistakes Our Brains Make Every Day And How To Prevent Them

8 Mistakes Our Brains Make Every Day And How To Prevent Them

https://www.businessinsider.com/8-common-thinking-mistakes-our-brains-make-every-day-and-how-to-prevent-them-2013-10

businessinsider.com

8

Key Ideas

Information that matches our beliefs

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

The "swimmer's body illusion"

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.

The sunk cost fallacy

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.

The gambler's fallacy

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.

The positive expectation bias

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.

The Buyer's Stockholm Syndrome

It happens when we rationalize our purchases, even if we're not satisfied with what we've got.

We're pretty good at convincing ourselves that those flashy, useless, badly thought-out purchases are necessary after all. 

The anchoring effect

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.

Memories vs. facts

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.

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SIMILAR ARTICLES & IDEAS:

Decision-making errors

Most decision-making errors boil down to:

  • logical fallacies (over-generalizations, comparing apples and oranges, circular thinking)
  • limiting beliefs (underes...
Confirmation Bias

If you already have an opinion about something before you've even tried to figure it out, chances are you'll over-value information that confirms that opinion.

Think about what kinds of information you would expect to find to support alternative outcomes.

Attribution Bias

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.

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The Pratfall Effect

Your likability will increase if you aren’t perfect.

Those who never make mistakes are perceived as less likable than those who commit the occasional faux pas. Messing up draws peop...

The Pygmalion Effect

Greater expectations drive greater performance.

The crux of this psychological phenomenon is the concept of a self-fulfilling prophecy: If you believe something is true of yourself, eventually it will be.

The Paradox of Choice

The more choices we have, the less likely we are to be content with our decision.

Even if our ultimate decision is clearly correct, when faced with many choices, we are less likely to be happy with what we choose. Because a wealth of choices makes finding contentment that much harder.

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Opportunity Cost

It is the estimated value of the best alternative or the best option that one misses out as a consequence of picking one particular option.

Example: Spending a limited resource, lik...

Opportunity Cost in Non-financial Situations

Opportunity cost in non-financial situations is more difficult to quantify. The loss or gain with choosing an option while foregoing another can be subjective and not readily comparable.

Example: While deciding on which job offer to take, we may consider job satisfaction, brand name, commute time, long-term growth, and the salary offered. While finalizing, we have to forego the other best offer. While deciding on a career, we have to consider options like prestige, impact and the work sector.

Calculating Opportunity Cost

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.

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