Related Research Articles
A cognitive bias is a systematic pattern of deviation from norm or rationality in judgment. Individuals create their own "subjective reality" from their perception of the input. An individual's construction of reality, not the objective input, may dictate their behavior in the world. Thus, cognitive biases may sometimes lead to perceptual distortion, inaccurate judgment, illogical interpretation, and irrationality.
Confirmation bias is the tendency to search for, interpret, favor, and recall information in a way that confirms or supports one's prior beliefs or values. People display this bias when they select information that supports their views, ignoring contrary information, or when they interpret ambiguous evidence as supporting their existing attitudes. The effect is strongest for desired outcomes, for emotionally charged issues, and for deeply entrenched beliefs. Confirmation bias is insuperable for most people, but they can manage it, for example, by education and training in critical thinking skills.
Behavioral economics is the study of the psychological, cognitive, emotional, cultural and social factors involved in the decisions of individuals or institutions, and how these decisions deviate from those implied by classical economic theory.
Psychology is an academic and applied discipline involving the scientific study of human mental functions and behavior. Occasionally, in addition or opposition to employing the scientific method, it also relies on symbolic interpretation and critical analysis, although these traditions have tended to be less pronounced than in other social sciences, such as sociology. Psychologists study phenomena such as perception, cognition, emotion, personality, behavior, and interpersonal relationships. Some, especially depth psychologists, also study the unconscious mind.
Recall in memory refers to the mental process of retrieval of information from the past. Along with encoding and storage, it is one of the three core processes of memory. There are three main types of recall: free recall, cued recall and serial recall. Psychologists test these forms of recall as a way to study the memory processes of humans and animals. Two main theories of the process of recall are the two-stage theory and the theory of encoding specificity.
The availability heuristic, also known as availability bias, is a mental shortcut that relies on immediate examples that come to a given person's mind when evaluating a specific topic, concept, method, or decision. This heuristic, operating on the notion that, if something can be recalled, it must be important, or at least more important than alternative solutions not as readily recalled, is inherently biased toward recently acquired information.
Hindsight bias, also known as the knew-it-all-along phenomenon or creeping determinism, is the common tendency for people to perceive past events as having been more predictable than they were.
The peak–end rule is a psychological heuristic in which people judge an experience largely based on how they felt at its peak and at its end, rather than based on the total sum or average of every moment of the experience. The effect occurs regardless of whether the experience is pleasant or unpleasant. To the heuristic, other information aside from that of the peak and end of the experience is not lost, but it is not used. This includes net pleasantness or unpleasantness and how long the experience lasted. The peak–end rule is thereby a specific form of the more general extension neglect and duration neglect.
In finance, a dead cat bounce is a small, brief recovery in the price of a declining stock. Derived from the idea that "even a dead cat will bounce if it falls from a great height", the phrase is also popularly applied to any case where a subject experiences a brief resurgence during or following a severe decline. This may also be known as a "sucker rally".
The anchoring effect is a psychological phenomenon in which an individual's judgements or decisions are influenced by a reference point or "anchor" which can be completely irrelevant. Both numeric and non-numeric anchoring have been reported in research. In numeric anchoring, once the value of the anchor is set, subsequent arguments, estimates, etc. made by an individual may change from what they would have otherwise been without the anchor. For example, an individual may be more likely to purchase a car if it is placed alongside a more expensive model. Prices discussed in negotiations that are lower than the anchor may seem reasonable, perhaps even cheap to the buyer, even if said prices are still relatively higher than the actual market value of the car. Another example may be when estimating the orbit of Mars, one might start with the Earth's orbit and then adjust upward until they reach a value that seems reasonable.
Serial-position effect is the tendency of a person to recall the first and last items in a series best, and the middle items worst. The term was coined by Hermann Ebbinghaus through studies he performed on himself, and refers to the finding that recall accuracy varies as a function of an item's position within a study list. When asked to recall a list of items in any order, people tend to begin recall with the end of the list, recalling those items best. Among earlier list items, the first few items are recalled more frequently than the middle items.
A market anomaly in a financial market is predictability that seems to be inconsistent with theories of asset prices. Standard theories include the capital asset pricing model and the Fama-French Three Factor Model, but a lack of agreement among academics about the proper theory leads many to refer to anomalies without a reference to a benchmark theory. Indeed, many academics simply refer to anomalies as "return predictors", avoiding the problem of defining a benchmark theory.
Choice-supportive bias or post-purchase rationalization is the tendency to retroactively ascribe positive attributes to an option one has selected and/or to demote the forgone options. It is part of cognitive science, and is a distinct cognitive bias that occurs once a decision is made. For example, if a person chooses option A instead of option B, they are likely to ignore or downplay the faults of option A while amplifying or ascribing new negative faults to option B. Conversely, they are also likely to notice and amplify the advantages of option A and not notice or de-emphasize those of option B.
The overconfidence effect is a well-established bias in which a person's subjective confidence in their judgments is reliably greater than the objective accuracy of those judgments, especially when confidence is relatively high. Overconfidence is one example of a miscalibration of subjective probabilities. Throughout the research literature, overconfidence has been defined in three distinct ways: (1) overestimation of one's actual performance; (2) overplacement of one's performance relative to others; and (3) overprecision in expressing unwarranted certainty in the accuracy of one's beliefs.
In finance, momentum is the empirically observed tendency for rising asset prices or securities return to rise further, and falling prices to keep falling. For instance, it was shown that stocks with strong past performance continue to outperform stocks with poor past performance in the next period with an average excess return of about 1% per month. Momentum signals have been used by financial analysts in their buy and sell recommendations.
Eyewitness memory is a person's episodic memory for a crime or other witnessed dramatic event. Eyewitness testimony is often relied upon in the judicial system. It can also refer to an individual's memory for a face, where they are required to remember the face of their perpetrator, for example. However, the accuracy of eyewitness memories is sometimes questioned because there are many factors that can act during encoding and retrieval of the witnessed event which may adversely affect the creation and maintenance of the memory for the event. Experts have found evidence to suggest that eyewitness memory is fallible.
In cognitive psychology and decision science, conservatism or conservatism bias is a bias which refers to the tendency to revise one's belief insufficiently when presented with new evidence. This bias describes human belief revision in which people over-weigh the prior distribution and under-weigh new sample evidence when compared to Bayesian belief-revision.
Cognitive bias mitigation is the prevention and reduction of the negative effects of cognitive biases – unconscious, automatic influences on human judgment and decision making that reliably produce reasoning errors.
Behavioral strategy refers to the application of insights from psychology and behavioral economics to the research and practice of strategic management. In one definition of the field, "Behavioral strategy merges cognitive and social psychology with strategic management theory and practice. Behavioral strategy aims to bring realistic assumptions about human cognition, emotions, and social behavior to the strategic management of organizations and, thereby, to enrich strategy theory, empirical research, and real-world practice".
References
- ↑ Use Cognitive Biases to Your Advantage, Institute for Management Consultants, #721, December 19, 2011
- ↑ Recency Bias: Overview, Oxford Reference
- ↑ "Tomorrow’s Market Probably Won’t Look Anything Like Today", Carl Richards, New York Times, February 13, 2012
- ↑ "Is Recency Bias Influencing Your Investing Decisions?", Portfolio Management, August 18, 2016, Charles Schwab
- ↑ "NBA MVP Voting: How Playing on the West Coast and Late-season Surges Affect the Race", Harvard Sports Analysis Collective, May 1, 2015
- ↑ "The Five Biggest Cognitive Biases that Impair Most Sports Bettors", Jeff Ma, November 12, 2014, ESPN
- 1 2 "Have the 'American Idol' Producers Turned Against David Archuleta?" Vulture , 14 May 2008.
- ↑ Shirley Halperin. "‘X Factor’: How Astro Got Eminem’s Permission to Alter His Song, Plus 9 More Burning Questions Answered", The Hollywood Reporter , 10 November 2011.
- ↑ Rebecca Iannucci. "SYTYCD Performance Finale Recap: Who Will (and Should) Win Season 14?", tvline.com, 18 September 2017.
- ↑ Lyndsey Parker. "Despite a Michael Bolton performance, 'American Song Contest' fails to fulfill its campy (Euro)vision" aol.com / Yahoo! Entertainment, 21 March 2022.
- ↑ Amanda Bell. "The Voice recap: 'Live Top 12 Performances'" Entertainment Weekly , 20 November 2017.
- ↑ Charlie Mason. "The Voice Recap: Whitney Houston, the Top 8 Have a Problem… or Do They?" tvline.com, 5 December 2022.
- ↑ Annie Barrett. "Dancing with the Stars season premiere recap: Will You Accept This Pose?" Entertainment Weekly , 19 March 2013.