Critical thinking

Denomination effect
(reading time – 20 sec.)

The denomination effect is a form of cognitive bias relating to currency, suggesting people may be less likely to spend larger currency denominations than their equivalent value in smaller denominations.

The effect occurs because large denominations are regarded as less fungible – that is, psychologically less replaceable with equivalent notes – than smaller denominations, the researchers said.

Topic: #CognitiveBiases
Source: ezonomics.com

Default effect
(reading time – 40 sec.)

The Default effect is a tendency to choose the default option when you are given a choice between several ones.

For example, scientific studies carried out regarding the relation of the Default Effect on organ donation found that there are less donors in countries where consent is not given by default. If you are simply put on the organ donor list by default because you haven’t actively expressed that you do not wish to be one then you probably would never even really consider this. Whereas if you were asked to actively give your consent then you would be more prone to start thinking about it in detail and might become more emotionally involved and less likely to agree.

Topic: #CognitiveBiases
Source: tactics.convertize.com

Endowment Effect
(reading time – 50 sec.)

The endowment effect is the bias and perception that the personal ownership of an object exceeds any listed market value.

One of the most famous examples of the endowment effect in the literature is from a study by Daniel Kahneman in which participants were given a mug and then offered the chance to sell it or trade it for an equally valued alternative (pens).

They found that the amount participants required as compensation for the mug once their ownership of the mug had been established ("willingness to accept") was approximately twice as high as the amount they were willing to pay to acquire the mug ("willingness to pay").

Topic: #CognitiveBiases
Source: Wikipedia

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Barnum effect
(reading time – 40 sec.)

The Barnum effect, also called the Forer effect, is a common psychological phenomenon whereby individuals give high accuracy ratings to descriptions of their personality that supposedly are tailored specifically to them, that are in fact vague and general enough to apply to a wide range of people.

This effect can provide a partial explanation for the widespread acceptance of some paranormal beliefs and practices, such as astrology, fortune telling, aura reading, and some types ofpersonality tests.

Topic: #CognitiveBiases
Source: Wikipedia

Serial-position effect
(reading time – 30 sec.)

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.

For example, in some study, one participant is given "Steve is smart, diligent, critical, impulsive, and jealous." and the other "Steve is jealous, impulsive, critical, diligent, and smart." These two sentences contain the same information. The first one suggests positive trait at the beginning while the second one has negative traits. Researchers found that the subjects evaluated Steve more positively when given the first sentence, compared with the second one.

Topic: #CognitiveBiases
Source: Wikipedia

Decoy effect
(reading time – 30 sec.)

A phenomenon in marketing where consumers have a specific change in preference between two choices after being presented with a third choice.

An old Economist advertisement example clearly explains it.

The ad featured three subscription levels: $59 for online only, $159 for print only, and $159 for online and print. Ariely figured out that the option to pay $159 for print only exists so that it makes the option to pay $159 for onlineand print look more enticing than it would if it was just paired with the $59 option.

Topic: #CognitiveBiases
Source: Wikipedia

Functional fixedness
(reading time – 40 sec.)

Functional fixedness is a cognitive bias that limits a person to use an object only in the way it is traditionally used. This bias limits the ability of an individual to use components given to them to complete a task, as they cannot move past the original purpose of those components. For example, if someone needs a paperweight, but they only have a hammer, they may not see how the hammer can be used as a paperweight. Functional fixedness is this inability to see a hammer's use as anything other than for pounding nails; the person couldn't think to use the hammer in a way other than in its conventional function.

When tested, 5-year-old children show no signs of functional fixedness. It has been argued that this is because at age 5, any goal to be achieved with an object is equivalent to any other goal. However, by age 7, children have acquired the tendency to treat the originally intended purpose of an object as special.

Topic: #CognitiveBiases
Source: Wikipedia

Ben Franklin effect
(reading time – 50 sec.)

The Ben Franklin effect is a proposed psychological phenomenon: a person who has already performed a favor for another is more likely to do another favor for the other than if they had received a favor from that person. An explanation for this is cognitive dissonance. People reason that they help others because they like them, even if they do not, because their minds struggle to maintain logical consistency between their actions and perceptions.

Topic: #CognitiveBiases
Source: Wikipedia

The Curse of Knowledge
(reading time – 40 sec.)

The curse of knowledge is a cognitive bias that occurs when an individual, communicating with other individuals, unknowingly assumes that the others have the background to understand.

For example, in a classroom setting, teachers have difficulty teaching novices because they cannot put themselves in the position of the student. A brilliant professor might no longer remember the difficulties that a young student encounters when learning a new subject. This curse of knowledge also explains the danger behind thinking about student learning based on what appears best to faculty members, as opposed to what has been verified with students.

Topic: #CognitiveBiases
Source: Wikipedia

Outcome Bias
(reading time – 20 sec.)

The outcome bias is an error made in evaluating the quality of a decision when the outcome of that decision is already known.

One will often judge a past decision by its ultimate outcome instead of based on the quality of the decision at the time it was made, given what was known at that time. This is an error because no decision maker ever knows whether or not a calculated risk will turn out for the best. The actual outcome of the decision will often be determined by chance, with some risks working out and others not. Individuals whose judgments are influenced by outcome bias are seemingly holding decision makers responsible for events beyond their control.

Topic: #CognitiveBiases
Source: Wikipedia

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Illusion Of Truth Effect
(reading time – 40 sec.)

People are more likely to identify as true statements those they have previously heard (even if they cannot consciously remember having heard them), regardless of the actual validity of the statement. In other words, a person is more likely to believe a familiar statement than an unfamiliar one.

The truth effect plays a significant role in various fields of activity. During election campaigns, false information about a candidate, if repeated in TV commercials, can cause the public to believe it. Similarly, advertising that repeats unfounded claims about a product may boost sales because some viewers may come to think that they heard the claims from an objective source.

Topic: #CognitiveBiases
Source: Wikipedia

Empathy Gap
(reading time – 30 sec.)

An empathy gap is a cognitive bias in which people underestimate the influences of visceral drives on their own attitudes, preferences, and behaviors.

The most important aspect of this idea is that human understanding is "state-dependent". For example, when one is angry, it is difficult to understand what it is like for one to be calm, and vice versa; when one is blindly in love with someone, it is difficult to understand what it is like for one not to be.


Topic: #CognitiveBiases
Source: Wikipedia

Ambiguity effect
(reading time – 30 sec.)

The ambiguity effect is a cognitive bias where decision making is affected by a lack of information, or "ambiguity". The effect implies that people tend to select options for which the probability of a favorable outcome is known, over an option for which the probability of a favorable outcome is unknown.

When buying a house, many people choose a fixed rate mortgage, where the interest rate is set in stone, over a variable rate mortgage, where the interest rate fluctuates with the market. This is the case even though a variable rate mortgage has statistically been shown to save money.


Topic: #CognitiveBiases
Source: Wikipedia

Omission Bias
(reading time – 20 sec.)

The omission bias is the tendency to judge harmful actions as worse, or less moral than equally harmful omissions (inactions) because actions are more obvious than inactions.

A real-world example is when parents decide not to vaccinate their children because of the potential chance of death—even when the probability the vaccination will cause death is much less likely than death from the disease prevented


Topic: #CognitiveBiases
Source: Wikipedia

Fear Of Missing Out
(reading time – 40 sec.)

In psychological terms, FOMO is a cognitive bias defined as the fear experienced by individuals when faced with the thought that they might miss out on a social occasion, a new experience, a profitable investment or a satisfying event.

Social media sites have become a large contributing factor to the FOMO sensation. People develop negative feelings and emotions from social media sites because of envy towards others’ posts and lives. Social media has created an easy-to-access, centrally located spot for people to constantly refresh their feeds and find out what others are doing in that exact moment.


Topic: #CognitiveBiases
Source: Wikipedia

Post Hoc Fallacy
(reading time – 35 sec.)

The Latin phrase “post hoc ergo propter hoc” means, literally, “after this therefore because of this.” The post hoc fallacy is committed when it is assumed that because one thing occurred after another, it must have occurred as a result of it. Mere temporal succession, however, does not entail causal succession. Just because one thing follows another does not mean that it was caused by it.

One example of the post hoc flaw is the evidence often given for the efficacy of prayer. When someone reasons that as they prayed for something and it then happened, it therefore must have happened because they prayed for it, they commit the post hoc fallacy. The correlation between the prayer and the event could result from coincidence, rather than cause, so does not prove that prayer works.


Topic: #LogicalFallacy
Source: logicalfallacies.info