What is the Subadditivity Effect? The Subadditivity Effect occurs when people are presented with multiple risks and asked to estimate the total probability of all these risks occurring. Despite having accurate information about each individual risk, individuals tend to underestimate the overall probability by adding up the probabilities in a suboptimal way. For example, if […]

What is the Plan Continuation Bias? The Plan Continuation Bias occurs when people exhibit a strong attachment to their original plans and are reluctant to change them, even in the face of new information or changing circumstances. This bias can lead individuals to continue with a plan that is no longer optimal, simply because it […]

What is the Hot-Hand Fallacy? The Hot-Hand Fallacy occurs when people mistakenly attribute short-term success to skill, ability, or some inherent quality, rather than recognizing that luck, chance, and randomness play a significant role. This bias leads individuals to overestimate their own abilities, as well as those of others, based on limited samples of performance. […]

What is the Gambler’s Fallacy? The Gambler’s Fallacy occurs when people assume that a random process will correct itself in the short term, resulting in an unrealistic expectation of future outcomes. This bias is rooted in the misunderstanding of probability and randomness. In reality, each event in a sequence of independent trials (such as coin […]

What is the G.I. Joe Fallacy? The G.I. Joe Fallacy occurs when people assume that possessing more information or knowledge about a situation will directly lead to improved decision-making outcomes. However, this assumption neglects the complexities of uncertainty and probability. Even with perfect knowledge, there are still limitations to predicting outcomes due to inherent uncertainties […]

What is the Escalation of Commitment Bias? The Escalation of Commitment bias arises when individuals become overly attached to a decision due to the resources they have already committed. This attachment leads them to continue investing in the decision, even if new information suggests that it may not be the best course of action. The […]

What is Berkson’s Paradox? Berkson’s Paradox occurs when two variables are correlated in a hospital or clinical setting, but the correlation disappears or even reverses when the analysis is restricted to patients with specific conditions. In other words, the paradox arises when a correlation between two variables appears strong within a selected population (e.g., hospital […]

What is the Distinction Bias? The Distinction Bias refers to the tendency for people to exaggerate the importance of small differences between options when evaluating them side by side. This bias leads individuals to overemphasize the distinctions between alternatives, even if these differences are relatively minor or insignificant in the grand scheme of things. History […]

What is the Denomination Effect? The Denomination Effect refers to the way in which the physical denomination of currency influences our perception of its value and our willingness to spend it. In other words, people tend to treat different denominations of money differently, even if they have the same face value. History of the Denomination […]

What is the Default Effect? The Default Effect is a cognitive bias that describes the tendency for people to stick with the default option or setting when faced with a decision. This phenomenon was first identified by psychologist Eric Johnson and his colleagues in 1993, who found that people tend to choose the default option […]