How do cognitive biases influence your everyday decisions?

1 Anchoring Bias

When you make decisions, the first piece of information you encounter often has an outsized influence on your thought process. This is known as anchoring bias. For example, if you see a shirt that's marked down from $100 to $50, you might perceive it as a better deal than if you'd seen it priced at $50 to begin with. Your initial reference point—the $100—anchors your perception of value, potentially leading you to spend more than you had planned.

2 Confirmation Bias

Your beliefs have a tendency to shape the information you notice and the way you interpret it. This is confirmation bias at work. You might find yourself only paying attention to news articles that support your political views or dismissing evidence that contradicts your preconceptions. As a result, you may make decisions based on a skewed view of the facts, which can lead to less effective outcomes.

3 Status Quo Bias

The comfort of familiarity can be a powerful force. Status quo bias is the tendency to prefer things to stay the same, even when change might be beneficial. You might stick with a suboptimal phone plan or bank, simply because it's what you're used to, despite there being better options available. This bias can keep you from exploring new opportunities and making improvements in your life.

4 Affect Heuristic

Feelings play a significant role in your decision-making. The affect heuristic is when your emotions influence your perceptions of risks and benefits. If you have a strong emotional reaction to something, like fear or excitement, you might make a quick decision without fully considering all the facts. This can lead you to overestimate the likelihood of negative outcomes or underestimate the potential benefits of a positive opportunity.

5 Bandwagon Effect

It's human nature to want to fit in, and this can affect your choices through the bandwagon effect. If many people are doing something or hold a particular opinion, you might be more inclined to follow suit without critically evaluating the situation yourself. This can be seen in trends and purchasing decisions, where the popularity of an item or idea can sway your own preferences, sometimes to your detriment.

6 Sunk Cost Fallacy

Finally, the sunk cost fallacy can trap you into continuing a course of action simply because you've invested time, money, or effort into it, even when it's clear that the venture is failing. For instance, you might keep watching a bad movie because you've already paid for the ticket, rather than using that time more enjoyably. This bias can lead to wasted resources and missed opportunities for better experiences.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?