315 Cognitive and Behavioral Biases

315 Cognitive and Behavioral Biases

Do you think you are a better driver than your friends? Is common sense ingrained in our veins? It appears not. Since the 1970’s psychologists have been proving we repeatedly make irrational judgements and decisions in similar circumstances. In fact, 93% of Americans surveyed thought they were a better driver than the median. That is not our common sense shining through, but one of many behavioral biases, and in this case illusory superiority.

I was able to convince my son I was a better driver than he was.

Uncertainty

We each suffer from behavioral and cognitive biases and during times of uncertainty, like Covid-19, they expand their influence through our reactions and quick decisions. In the time span I wrote, edited, and re-wrote this article I witnessed multiple biases. They included social proof, attribution bias, political bias, authority bias, status quo bias, confirmation bias, recency bias, certainty effect, illusion of control and I likely missed more than I noticed.

Awareness

As we learn more about the specific behavioral biases it becomes easier to notice them in others, but recently I have started to notice them more in myself. For instance, I read a headline about Tom Hanks, who I know little about, and care to know even less. The headline read, “Tom Hanks tests positive!” As I finished the short headline, I immediately felt more susceptible to catching Coronavirus myself. It did not matter that Tom was in Australia, or that the headline did not mention the Coronavirus disease. My immediate reaction was shaped by recency bias, herd behavior, and authority bias. These biases quickly led me to conclusions that were not based on facts.

Overcome the Bias

I do not want to be biased and I do not want you to be either. It is necessary to identify the biases in and around us so that we can begin to overcome them. Since diving into behavioral finance, I have found more than 316 types of behavioral and cognitive biases that affect our personal finances, investments, and everyday lives. Our research has already begun and you can dive right in with one of our prior posts on Loss Aversion, Illusion of Control, Home Bias, or Issues with Thinking Fast.

Join the Journey

I listed out each of the 316 biases below and if one intrigues you, leave a comment here or tweet me @HITInvestments. I will prioritize our research and write about the most intriguing biases first. There are only 312 more to learn about, if you are not already subscribed, join us on our perpetual learning journey here.

316 Behavioral and Cognitive Biases

(At initial publication there were only 315)

Action BiasAdverse SelectionAffect HeuristicAge Related PositivityAkerlof’s LemonsAmbiguity AversionAmbiguity EffectAnchoringAnthropocentric ThinkingAnthropomorphismArbitrary CoherenceAttention, Limits OfAttentional BiasAttraction EffectAttribute SubstitutionAttribution BiasAuthority, Appeal ToAutomation BiasAvailability CascadeAvailability HeuristicBabe Ruth EffectBackfire EffectBad EventsBandwagon EffectBarnum EffectBase Rate FallacyBeauty EffectBelief BiasBen Franklin EffectBenford’s LawBerkson’s ParadoxBernoulli’s ErrorsBird In The Hand FallacyBlind Spot BiasBounded RationalityBystander EffectCertainty EffectChoice DeferralChoice OverloadChoice-Supportive BiasClever Hans EffectClustering IllusionCocktail Party EffectCognitive DepletionCognitive DissonanceCognitive EaseCollective BeliefCommitment BiasCompassion FadeConfirmation BiasCongruence BiasConjunction FallacyConservatism (Belief Revision)Continued Influence EffectContrast EffectConversational BiasCourtesy BiasCritical EvaluationCurse Of KnowledgeCursednessData Mining ErrorsData Snooping BiasDecision FatigueDecision-MakingDeclinismDecoy EffectDefault EffectDefensive Decision MakingDenomination BiasDenomination EffectDepressionDisappointment AversionDisaster MyopiaDisposition EffectDistinction BiasDiversification BiasDread RiskDunning–kruger EffectDuration NeglectDynamic InconsistencyEasier To ProcessEasterlin ParadoxEconomic ReflexivityEffort JustificationEgo DepletionElimination-By-AspectsEmpathy GapEmperor’s New Clothes SyndromeEnd-Of-History IllusionEndowment EffectExpectation BiasExperimenter’sExpert IntuitionExposure-Suspicion BiasExtreme AversionFallacy Of CompositionFallacy Of DivisionFallacy Of FrequencyFalse MemoryFamiliarity EffectFear Of Missing Out (Fomo)Focusing EffectFocusing IllusionForer EffectFormulation EffectFramingFraming Cognitive BiasFraming EffectFrequency IllusionFunctional FixednessFundamental Attribution ErrorGalatea EffectGambler’s FallacyGroup Attribution ErrorGroup Of PeopleGroup PolarizationGroupthinkHabitHalo EffectHandicap PrincipleHard-Easy BiasHard–easy EffectHawthorne EffectHedonic AdaptationHerd BehaviorHidden MessagesHindsight BiasHome BiasHostile Attribution BiasHot-Cold Empathy GapHot-Hand FallacyHuman–robot InteractionHyperbolic DiscountingIdentifiable Victim EffectIdeomotor EffectIkea EffectIllicit TransferenceIllusion Of ControlIllusion of UnderstandingIllusion Of ValidityIllusory CorrelationIllusory Pattern RecognitionIllusory SuperiorityIllusory Truth EffectImpact BiasImplicit AssociationIn-Group BiasInformation BiasInformation OverloadInsensitivity To Sample SizeInstant History BiasInter-Group BiasInternet Filter BubbleIntrospection IllusionIntuitive PredictionsIrrational Escalation Or Escalation Of CommitmentJanuary EffectJevons’ ParadoxLake Wobegone EffectLaw Of Large NumbersLaw Of Small NumbersLaw Of The InstrumentLess-Is-Better EffectLess-Is-More EffectLicensing EffectLimit Order EffectLinda ProblemLongshot-Favorite BiasLook-Elsewhere EffectLoss AversionLow Volatility AnomalyMan In The MoonMan With A Hammer SyndromeMental AccountingMere Exposure EffectMere Possession EffectMindlessnessMinsky MomentMoney IllusionMonte Carlo FallacyMonty Hall ProblemMoral Credential EffectMoral HazardMoral LicensingMotivation Crowding Out EffectMyopic Loss AversionNaive DiversificationNarrative FallacyNegativity BiasNegativity EffectNeglect Of ProbabilityNoise TradingNormalcy BiasNot Invented HereObsequiousness BiasObserver BiasObserver-Expectancy EffectOmission BiasOptimism BiasOptimism/Pessimism BiasOstrich EffectOutcome BiasOverconfidence EffectOverjustification EffectPain Of PayingPareidoliaParkinson’s Law Of TrivialityPartitioningPeak-End RulePerson Or ThingPersuasion BiasPessimism BiasPhenomenonPlacebo EffectPlanning FallacyPluralistic IgnorancePollyanna PrinciplePositive Outcome BiasPositivity BiasPost-Purchase RationalizationPresent BiasPrimingPro-Innovation BiasProcrastinationProjection BiasProspect TheoryPseudo-certainty EffectPsychological ResiliencePublication BiasPygmalion EffectRare EventsRatio BiasReactanceReactive DevaluationRecallRecency IllusionReciprocityRecords Played In ReverseReflection EffectRegression BiasRegretRegret AversionRepresentative HeuristicRepresentativeness HeuristicResource DepletionRestraint BiasReverse PsychologyRevise One’s BeliefRhyme As Reason EffectRisk AversionRisk CompensationRisky ShiftRoom EffectRosy RetrospectionRound Number EffectSailing-Ship EffectSalience BiasSatisficingScarcitySeersucker IllusionSelection BiasSelective PerceptionSelf Serving BiasSelf-ControlSelf-Enhancing Transmission BiasSelf-Serving Attribution BiasSelf-Serving BiasSemmelweis ReflexSexual Over-perception BiasSharpshooter EffectSimulation HeuristicSingularity EffectSocial Comparison BiasSocial Desirability BiasSocial Intelligence HypothesisSocial ProofStated Multiple TimesStatus Quo BiasStereotypingSubadditivity EffectSubject-Expectancy EffectSubjective ValidationSuddenly Appears EverywhereSunk Cost EffectsSunk Cost FallacySuperbowl EffectSuperstitionSurrogationSurvivorship BiasSystem JustificationTexas Sharpshooter EffectThe Curse of Knowledge and Hindsight BiasThe Dunning-Kruger EffectThe Forer Effect (a.k.a. The Barnum Effect)The Sunk Cost FallacyThird-Person EffectTime Discounting / Present BiasTime-Saving BiasTitanic EffectTragedy Of The CommonsTruthinessTurkey IllusionUnacceptability BiasUndermining EffectUnit BiasValence EffectVon Restorff EffectWeber–fechner LawWell Traveled Road EffectWinner’s CurseWishful ThinkingWomen Are Wonderful EffectZeigarnik EffectZero Price EffectZero-Risk BiasZero-Sum Bias