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Cognitive biases in entrepreneurship: a research report
Cognitive biases in entrepreneurship: a research report
Scenario 1 – Joe and Jane decided to play a game in which they toss a coin a few times. Every time a head came up, Joe had to give Jane $10 and every time a tail came up, Jane had to give Joe $10. They could toss the coin any number of times they ... Read More
·nesslabs.com·
Cognitive biases in entrepreneurship: a research report
you don't know what you don't know
you don't know what you don't know
Why do ignorant folks tend to overestimate the extent of their knowledge? How do incompetent people often seem to be unaware of how deficient their expertise is? Turns out, we are not very good at evaluating ourselves accurately. And one of the most obvious manifestations of this psychological deficiency is the Dunning–Kruger effect, the cognitive ... Read More
·nesslabs.com·
you don't know what you don't know
How to practice nuanced thinking and avoid polarized thinking
How to practice nuanced thinking and avoid polarized thinking
“This is just wrong.” How many times have you heard that phrase during a heated conversation? Such categorical statements never seem to help in coming to an agreement, or at least to create opportunities to learn. Whether at an interpersonal level or at a broader scale, a lack of nuanced thinking can have a significant ... Read More
·nesslabs.com·
How to practice nuanced thinking and avoid polarized thinking
Survivorship bias: when failure gets forgotten
Survivorship bias: when failure gets forgotten
Survivorship bias is a common bias that leads to false conclusions by focusing on the elements that made it past a selection process, and overlooking the ones that did not.
·nesslabs.com·
Survivorship bias: when failure gets forgotten
Hindsight bias: the knew-it-all-along phenomenon
Hindsight bias: the knew-it-all-along phenomenon
Historians and physicians alike are constantly fighting an invisible beast: the hindsight bias, also known as creeping determinism, which is the tendency for people to perceive past outcomes as having been more predictable than they actually were. Linked to distortions of our memories, the hindsight bias causes us to think we knew how an event ... Read More
·nesslabs.com·
Hindsight bias: the knew-it-all-along phenomenon
Memory bias: how selective recall can impact your memories
Memory bias: how selective recall can impact your memories
How many times have you forgotten where you left your keys? What about your friend who always seems to make up events that never happened? Do you ever struggle to remember someone’s name? Don’t worry—you’re not the only one. Our memory is far from perfect, and the memory bias effect doesn’t help. A memory bias ... Read More
·nesslabs.com·
Memory bias: how selective recall can impact your memories
Why do we need to be right?
Why do we need to be right?
One of the most prevalent phenomena in our collective psyche is the need to be right. Pundits debate their views of climate change and political conflicts on television, we have arguments with friends as to who said what, and we often triumphantly proclaim: “I told you so!” This phenomenon starts early. From a very young ... Read More
·nesslabs.com·
Why do we need to be right?
when current beliefs trump new knowledge
when current beliefs trump new knowledge
Why do we often want to stick with our current beliefs, even when new knowledge seems to contradict them? Why does dogmatic belief habitually trump objective evidence? This effect is called the Semmelweis reflex, which Thomas Szasz described as “the invincible social power of false truths”—a phenomenon so dangerous it has caused many deaths throughout ... Read More
·nesslabs.com·
when current beliefs trump new knowledge
why we love astrology and personality tests
why we love astrology and personality tests
What do astrology, fortune telling, and cold reading have in common? They all exploit the Barnum Effect to convince people that the statements are personal to them.
·nesslabs.com·
why we love astrology and personality tests
Declinism: how rosy retrospection impacts decision-making
Declinism: how rosy retrospection impacts decision-making
“It was better before,” says your friend. “Ha, those were the days,” your reply with a sigh. Declinism is the belief that societies tend towards decline, often linked with rosy retrospection—our tendency to view the past more favourably and the future more negatively. It may seem harmless, but declinism can cloud your judgement and lead ... Read More
·nesslabs.com·
Declinism: how rosy retrospection impacts decision-making
why we feel like the main character in our own movie
why we feel like the main character in our own movie
The egocentric bias is a common cognitive bias that causes us to rely too much on our own perspective when considering events, ideas, and beliefs. It can make it harder to understand other people’s perspectives, and can cloud our judgement when making decisions.
·nesslabs.com·
why we feel like the main character in our own movie
The Seven Sins of Memory (and the Seven Penances)
The Seven Sins of Memory (and the Seven Penances)
“Our memory is a more perfect world than the universe: it gives back life to those who no longer exist,” once said French author Guy de Maupassant. Whether it’s short-term memory allowing us to perform simple calculations on the fly, long-term memory which can store larger quantities of information, sometimes for a whole life span, ... Read More
·nesslabs.com·
The Seven Sins of Memory (and the Seven Penances)
when we stick to what we know
when we stick to what we know
Surely, a knife is made for cutting things. And you can only use a cotton swab to clean your ears — right? Functional fixedness is a form of cognitive bias which makes us automatically narrow down the function of each tool. Although functional fixedness offers great mental shortcuts, it can present barriers to working to your full creative potential.
·nesslabs.com·
when we stick to what we know
The impact of the ambiguity effect on decision-making
The impact of the ambiguity effect on decision-making
When something is described as ambiguous, it means that it is confusing, unclear, or open to different interpretations. Entrepreneurs face ambiguous situations all the time; it’s the nature of the business. For example, entrepreneurs make decisions about pricing, marketing, vendors, and finances that don’t have certain outcomes. In addition, entrepreneurs often have to make choices ... Read More
·nesslabs.com·
The impact of the ambiguity effect on decision-making
when we irrationally trust the judgement of experts
when we irrationally trust the judgement of experts
Whether it’s a doctor, a financial advisor, or a manager, we sometimes apply whatever an authority figure tells us to do, despite knowing that their recommended approach is inefficient, wrong, and potentially even dangerous. Why is that? One explanation is the authority bias. The authority bias is our tendency to be more influenced by the ... Read More
·nesslabs.com·
when we irrationally trust the judgement of experts
Social proof: is there always safety in numbers?
Social proof: is there always safety in numbers?
The informal fallacy of making choices that fit with those of our peers is known as social proof. While it can help us to make everyday decisions, it is vital to learn how to use it wisely rather than blindly following the crowd into what could turn out to be a bad choice.
·nesslabs.com·
Social proof: is there always safety in numbers?
Mental filtering: when we focus on negative details
Mental filtering: when we focus on negative details
Do you tend to focus on negative details? Mental filtering is a cognitive distortion that leads us to magnify the negative details of a situation, while filtering out the positives.
·nesslabs.com·
Mental filtering: when we focus on negative details