We have talked many times about some of the psychological errors that become traps for our minds. These cognitive biases can affect anything from inconsequential, inconsistent decisions to far more serious matters.
So understanding how our mind works, and why it works that way, will help us stop falling victim to these psychological biases.
Six very common psychological biases
- Commitment bias
- Confirmation bias
- Omission bias
- Survivorship bias
- Regression to the mean
- And overconfidence bias
We have also looked at certain cognitive biases that act as mental traps when it comes to money. Some of the mistakes or mental traps we fall into with money are:
- Thinking about money in relative rather than absolute terms.
- Not thinking about where else your money could go.
- Not applying the “Ulysses contract”.
- The sunk cost effect.
For anyone who wants to dig much deeper into cognitive biases, a recommended read is Thinking, Fast and Slow by Daniel Kahneman.
Featured image: McGeddon, CC BY-SA 4.0, via Wikimedia Commons.
