Growth Mindset Psychology: The Science of Self-Improvement

Human Nature Vs. Money: Battling Irrationality & Thinking Traps [#2 Cognitive Biases]

May 19, 2024

31:09

Snipd AI

A deep dive into cognitive biases and manipulation tactics that impact decision-making. Learn how to protect against pricing tactics, make better investments, and reduce irrational decisions. Explore real-life examples of anchoring bias and financial traps, emphasizing the importance of recognizing losses and avoiding sunk cost fallacy. Discover how overconfidence and information bias can distort judgment, leading to inaccurate predictions in decision-making processes.

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Episode notes

Podcast summary created with Snipd AI

Quick takeaways

Anchoring Bias impacts decision-making in auctions and stock trading.

Framing Effect influences choices by presentation of information in marketing and politics.

Deep dives

The Power of Anchoring

An experiment conducted by psychologist Daniel Ailey demonstrated the impact of anchoring on people's decision-making processes. The audience members, based on their randomly assigned two-digit numbers, significantly influenced their bidding behavior in an auction. Despite the lack of logical connection between the numbers and the item being auctioned, the anchoring effect led participants with higher numbers to bid substantially higher. This phenomenon extends beyond auctions, affecting various scenarios like stock trading and lawmakers assessing crime cases.

Introduction

3min

Understanding Decision Biases in Consumer Behavior

14min

Navigating Financial Traps and Sunk Cost Fallacy

3min

Exploring Overconfidence and Information Bias in Decision-Making

6min

Exploring Decision-Based Cognitive Biases in Financial Decisions

2min

Manipulation tactics that work - Irrational behaviours that don't - Prediction Fallacies we fall for.

In this episode, we dive further into our series on cognitive biases and how they cloud our judgment.

Studying applied psychology we can learn how we get manipulated by companies and start to protect ourselves from our own irrationality.

Take homes:

How to protect ourselves against pricing tactics
Reduce irrational decisions
Build awareness of the truth
Reduce unpleasant surprises
Make better investments

Further reading:

Thinking Fast and Slow - Daniel Kahneman - UK Book - US Book
Predictably Irrational - Dan Ariely - UK Book - US Book

Further Listening

Enjoyed this episode? Check out the rest of the Cognitive Ciases series:

Ego Blindspots: 9 Cognitive Biases to Avoid - [May 7th]
[YOU ARE HERE] - Human Nature vs. Money
Confirmation Bias and the 7 Sins of Lazy Thinking - [June 4th]
Reality Distortion and the 7 Illusions of Perception Impact Everyone - [June 18th]
Cognitive Rigidity and How Einstein Overcame the 5 Biases that Keep Us Stuck - [June 19th]
Thinking Fast and Slow: How to Make Better Decisions - [July 12th]

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Discussed links

Growth Mindset pod

Sam Webster Harris explores the psychology of happiness, satisfaction, purpose, and growth through the lens of self-improvement.

Success and happiness is a state of mind unique to ourselves and is our responsibility to create.

Watch the pod - YouTube (Growth Mindset)
Mail - GrowthMindsetPodcast(at)gmail.com
Insta - SamJam.zen

Chapters

00:00 SECTION - Framing effects

00:01 #1 Anchoring Bias

02:54 The Opposite Strategy

04:59 #2 Framing Effect

08:06 #3 Decoy Effect

10:45 SECTION - Irrational

10:47 #4 Gambler's Fallacy

16:45 #5 Sunk Cost Fallacy

19:21 SECTION - Bad Prediction Flaws

19:55 #6 Overconfidence Bias

21:30 #7 Information Bias

25:34 Send Off

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