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What are Heuristics and Biases?

Heuristics are mental shortcuts or rules of thumb that help us make quick decisions, but they can often lead us astray. Biases are systematic errors in thinking that affect the decisions and judgments we make. These two concepts explain why we sometimes make irrational choices, even when we think we’re being logical.

Heuristics: Quick Mental Shortcuts

  • Availability Heuristic

    • 🔮 We judge the likelihood of events based on how easily examples come to mind.

    • Example: After watching the news, you might overestimate the chances of rare events (e.g., plane crashes) because they are more memorable.

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  • Representativeness Heuristic

    • 🎲 We assess the probability of something based on how similar it is to a stereotype or a typical case.

    • Example: Assuming someone is a librarian because they seem introverted, even though the probability of them being a librarian might be low.

Biases: Systematic Thinking Errors

  • Loss Aversion

    • 📉 People fear losing more than they value gaining.

    • Example: You’d rather avoid losing $10 than gaining $10, even though the monetary value is the same. This bias explains why people are risk-averse.

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  • Overconfidence Bias

    • 🏆 People tend to overestimate their abilities or knowledge.

    • Example: You might think you can ace a test without studying because you overestimate your understanding of the material.

How Do Heuristics & Biases Affect Decisions?

  • Heuristics

    • 🧠 Step 1: Encounter a decision or problem.

    • ⚡ Step 2: Use a mental shortcut (e.g., availability or representativeness) to quickly assess the situation.

    • 🎯 Step 3: Make a fast decision, often without fully analyzing all the information.

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  • Biases

    • 🔍 Step 1: Encounter a decision that involves risk or uncertainty.

    • ❗ Step 2: Cognitive bias (e.g., loss aversion or overconfidence) influences your thinking.

    • 🚫 Step 3: You make an irrational choice based on the bias rather than logic or reason.

Heuristics & Biases

  • Heuristics

    • 🔮 Availability Heuristic: Decisions based on easily recalled examples.

    • 🎲 Representativeness Heuristic: Judging by similarity to a stereotype.

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  • Biases

    • 📉 Loss Aversion: Weighing losses more heavily than gains.

    • 🏆 Overconfidence: Overestimating our skills or knowledge.

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