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Definition of Loss Aversion

  Definition of Loss Aversion   Loss aversion refers to the psychological tendency where people especially dislike experiencing losses and may forgo larger gains to avoid small losses. It's akin to the logic of "feeling more upset about losing one of my favorite socks than buying a new pair." Examples of Loss Aversion   For instance, when buying stocks, the thought 'I hope this stock goes up' is often overshadowed by 'I hope I don't lose my money.' It's like stubbornly insisting on eating a burnt cookie because "it must be eaten" at all costs. Another example is the tendency to stick with the status quo rather than taking a risk for a minor gain, similar to holding onto old, comfortable shoes instead of getting new ones. Lessons from Loss Aversion   The lesson from loss aversion is that sometimes taking risks can lead to greater benefits in the long run. Of course, this doesn't mean you should recklessly go fishing for the remot

Definition of Kludge

  Definition of Kludge   A kludge refers to an improvised or makeshift solution, characterized by being 'functional but inelegant'. It solves a problem but is often inefficient or a short-term fix, similar to stabilizing an unstable table leg with tape. Examples of Kludge   Examples of kludges include complex and inefficient computer program codes or everyday items used as temporary solutions to simple problems, like using duct tape to temporarily fix a leaking pipe. Lessons from Kludge   Kludges can be useful for quick fixes but often lead to bigger problems in the long-term perspective, much like a hastily prepared dinner causing indigestion. Conclusion on Kludge   While kludges are a method of problem-solving, they are not the optimal solution. It's important to seek long-term solutions, and kludges teach us that quick fixes are not always the best choice, similar to the adage 'haste makes waste'.   Kludges encourage us not to rely on short-term solution

Definition of Dopamine

  Definition of Dopamine   Dopamine is a chemical messenger in our brain, responsible for 'reward' and 'pleasure.' It's like a friend whispering, "This is great! Let's do it again!" encouraging us to pursue enjoyment. Examples of Dopamine   The joy we feel when eating cake or achieving a goal, that's dopamine at work. It's akin to the happiness we experience when eating delicious food. Lessons from Dopamine   Dopamine teaches the importance of moderate pleasure. It imparts the lesson that finding balance in life is crucial, similar to how enjoying desserts in moderation is beneficial but overindulgence is not. Conclusion on Dopamine   Dopamine is a vital part of our life. It brings joy and passion, but we must be careful not to depend on it excessively. Finding balance in all aspects of life is key, and dopamine, like a seasoning in life, enriches our existence when used in moderation.    

What is a base rate neglect?

   Definition of base rate neglect Ignoring the base rate refers to a cognitive bias that ignores probabilities and makes judgments contrary to statistics. Ignoring the base rate is also called the base rate error. Characteristics of base rate neglect   Base rate neglect results in ignoring statistics and making judgments based on impressive subjective experience.   Base rate neglect makes you judge based on your own stereotypes. Base rate neglect is also related to the representativeness heuristic. Information that comes to mind is given priority over statistics. Example of base rate neglect There are people who read the financial newspaper every day and look at the stock market every day. What kind of job is this person likely to have? 1. This person is most likely a Wall Street brokerage analyst. 2. This person is most likely a student. The answer is number two. Because of their descriptions of economic newspapers and the stock market, you are likely to think of them as securities a

What is a hyperbolic discounting?

   The definition of hyperbolic discounting  Hyperbolic discounting ​​refers to a cognitive bias that values ​​present values ​​high and future values ​​low. It is also called present bias because it places more weight on the present. Characteristics of hyperbolic discounting    Due to hyperbolic discounting, they think differently about the value of money received now and money received in the future.    If the two rewards are similar, we think the current reward is valued more than future reward.   Hyperbolic discounting arises from uncertainty about the future. Let's look at the old ways of human survival. In the era of hunting, the food of today was more valuable than the food of the future. In other words, hyperbolic discounting was a means of survival. An example of hyperbolic discounting An example of hyperbolic discounting is a discount coupon that does not make much difference. Which of these two coupons would you choose? Usually, you choose the former from the above two c

What is a planning fallacy?

 The definition of Planning fallacy   Planning fallacy refers to a cognitive bias that leads to errors in planning by thinking optimistically when making plans. Because you plan optimistically, in reality your plans will be disrupted. Influenced by the wishful thinking bias. Characteristics of planning fallacy    It has to do with lazy perfectionists. Because it actually takes longer than you planned.    Due to planning fallacies, you overestimate yourself and underestimate the cost or time of planning.    Planning fallacies make it difficult to prevent even the worst-case scenario.   Examples of planning fallacies Planning fallacies can lead to unrealistic optimism when making plans. City A, which intends to construct the subway, has set a budget of 10 billion dallor and a construction period of 5 years. However, since the construction is carried out for about a year, the construction period is expected to take about 7 years, and the budget is said to require an additional 3 billion d

What is a conjunction fallacy?

   What is a conjunction fallacy?  Conjunction fallacy refers to a cognitive bias caused by incorrectly calculating probabilities. It is a judgment based on subjective probability rather than objective probability. Conjunction fallacies are also called federation fallacy, connection fallacy. Characteristics of conjunction fallacy     Intuitive judgment is possible due to conjunction fallacy. (However, it is most likely not accurate.)    Conjunction fallacies lead to errors in probability calculations because intuitive thinking instead of rational thinking.    Because of the conjunction fallacy, we mistakenly think that (probability of event) x (probability of event) is greater than (probability of event).   Examples of conjunction fallacies   Due to the conjunction fallacy, you can make irrational judgments in real life as shown below. While waiting for the roller-coasters, the person next to you is playing a mobile game happily. Which of the following is that person is most likely to

What is overcome bias?

  What is outcome bias? Outcome bias refers to cognitive bias in ignoring processes and judging outcomes based on whether the outcome is positive or negative. Characteristics of outcome bias      Because of outcome bias, we ignore the process and judge only by the outcome.      Outcome bias causes you to simply focus on whether the outcome is positive or negative.      If a rational choice at the time has negative consequences due to outcome bias, it is mistaken for an irrational choice.   Examples of Outcome bias   An example of outcome bias is every choice you make on a daily basis. Results bias can occur when a choice that was good at the time but has bad results today, or a choice that was bad at the time but has good results now. Outcome bias three-line summary  -Outcome bias refers to a cognitive bias that ignores the process and judges only the outcome. -Due to outcome bias, even a rational choice will be judged as a result. -Outcome bias occ

What is narcissism?

    Definition of narcissism In severe narcissism, Narcissism stands for Narcissistic Personality Disorder. Narcissism originated in the story of Narcissus in Greek and Roman mythology. Characteristics of narcissism      Narcissists envy an exaggerated image of themselves.     Narcissism, when in excess, can lead to Narcissistic Personality Disorder.     Narcissists are often caused by trauma or betrayal from the past.     Narcissism is easy to see in modern society.     Excessive narcissism seeks to control others. Narcissists compel their own thoughts into others.     Narcissists have an excess of self-image. Narcissists think their thoughts or actions are better than others.     Narcissists are not good at empathizing with others.     Narcissists do not feel guilty or ashamed.     Narcissists crave power and fame excessively.     Narcissism can also be viewed as false confidence. Narcissism arises from the gap between their ideals and reality.     Narcissists have a sense of inferio

What is Availability heuristic?

  Definition of Availability heuristic  The availability heuristic refers to a cognitive bias in which one reasons or makes inferences based on easily remembered information or recently encountered information. It is also called the ease heuristic because it evaluates based on information that is easy to remember.   Features of the Availability heuristic      The availability heuristic makes us prefer information that can be easily figured out over objective information or statistics.      Limited rationality leads to availability heuristics. In other words, the availability heuristic is in contrast to rational judgment.      Humans have been learning the availability heuristic to make quick decisions in hunting and gathering for thousands of years. If you try to make rational judgments even in your daily thoughts, you will be wasting time and mentality.       The availability heuristic leads to overestimating the big things that rarely happen over the small things that happen often. E

What is Pseudocertainty effect?

  Definition of Pseudocertainty effect The pseudocertainty effect refers to the phenomenon of mistaking the uncertain for the certain. Because it is false certainty, it is also called the quasi-certainty effect or the false certainty effect. Features of the Pseudocertainty effect     The Pseudocertainty effect creates a tendency to ignore probabilities.     The Pseudocertainty effect makes it impossible to make rational judgments about probabilities.     The Pseudocertainty effect leads to hasty decisions. Examples of Pseudocertainty effects   The Pseudocertainty effect is easily seen in advertising or marketing. Most of the events that are written as 100% winning like the above phrase require additional conditions. Alternatively, the quality or price of the product itself may be different. For example,   As such, the smartphone or smartwatch that many people want is given to only a small fraction of the lottery, and 100 points are given to all participants, giving the phrase 100% winn

What is gaslighting? (psychological domination)

  Definition of Gaslighting  Gaslighting is called psychological domination. Gaslighting refers to the act of guiding the behavior of the other person in the direction you want.  Gaslighting exploits human biases or attribution errors.   Conditions of Gaslighting  There are three main requirements for gaslighting. The three requirements are a close relationship with the victim, the victim's mistakes, and the victim's anxiety.   Steps of gaslighting     Close relationship between victim and perpetrator  First of all, a close relationship between the victim and the perpetrator must be premised. A close relationship relieves the victim's vigilance. They demand submission or submission from others, mainly through sympathy or excuses such as “It's all because I'm thinking of you” or “that’s what I can do better.”     Destroyed victim's self-esteem and learned helplessness If the victim and the offender form a close relationship through the above process, the victim&#

What is affect heuristic? (emotional heuristic)

   Definition of affect heuristic Affect heuristic is a cognitive bias in which judgments and choices are made based on emotions. Affect heuristic is similar to choosing to avoid loss, as it is the bias that arises from loss aversion. It is also called emotional heuristic because it makes emotional judgments. Features of affect heuristic Affect heuristic causes emotional thinking to take precedence over rational thinking. Affect heuristic can also be caused by the atmosphere or use of words. Affect heuristic makes you more likely to agree with your likes and less likely to agree with your dislikes. Affect heuristic causes emotions or feelings to be more important than objective information or facts. Examples of affect hueristic Affect heuristic is a bias that occurs in all real life. Affect heuristic arises from what you like and what you don't like. As in the example above, You prefer the unsubstantiated claims of the person you like to the logical claims of the person you don'