BSCI concepts and Biases
The science is clear: humans take mental shortcuts. Here you can read about why we do this and how you can avoid it.
System 1 and 2
In recent years, psychologists have proposed a theory of dual systems of the mind: System 1 and System 2. The brain is not literally divided like this, but it is a useful analogy.
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System 1 is automatic, quick, intuitive, emotional and reactive.
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System 2 is conscious, effortful, logical, and deliberate.
Anchoring
Anchoring is our tendency to rely too heavily, or "anchor," on one trait or piece of information, often in the immediate context when making decisions.
Heuristics
Heuristics are shortcuts or rules of thumb for decision-making to aid us in finding a quick, satisfactory, but perhaps not always perfect, answer to a complex question. They help us make quicker, cognitively efficient decisions.
Framing
Our decisions and preferences are affected by how information is presented to us. How something is framed, or presented, can make different features more or less salient.
Social norms
We have a common tendency to adopt the opinions and follow the behaviours of the majority.
Discounting the future
We tend to focus on today rather than think about what tomorrow might bring. We discount the future in favour of today. More specifically, it is the human tendency to put more value on rewards that are available now than rewards in the future. Power of now is also known as discounting the future, present bias or time inconsistency.
Affect heuristic
We have a tendency to make decisions based on their emotions and how they feel about something - a System 1 response - rather than any rational, logical or thought-out reasoning.
Availability bias
We often judge the likelihood of an event, or frequency of its occurrence by the ease with which examples and instances come to mind.
Mental accounting
We have a natural inclination to categories, compartmentalise and treat
money differently depending on where it comes from, where it is kept, or how it is
spent to help us organise, keep track of financial activities and control our spending.
Loss aversion
Loss aversion is a cognitive bias where we generally feel the pain of a loss more than the pleasure of equal gain. This means that people value more what they already have than what they stand to gain.
Status quo bias
Status quo bias is a preference for the current state of affairs. We often avoid change; and if faced with a choice tend to go-with-the-flow of pre-set options or defaults.
Confirmation bias
Confirmation bias is when we seek or interpret evidence in ways that support our pre-existing beliefs or hypotheses. People search for information that further confirms what they already believe, and discount information that conflicts with their belief.