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Present bias is the tendency to settle for a smaller present reward rather than wait for a larger future reward, in a trade-off situation. [ 1 ] [ 2 ] It describes the trend of overvaluing immediate rewards, while putting less worth in long-term consequences. [ 3 ]
Behavioral game theory, invented by Colin Camerer, analyzes interactive strategic decisions and behavior using the methods of game theory, [85] experimental economics, and experimental psychology. Experiments include testing deviations from typical simplifications of economic theory such as the independence axiom [ 86 ] and neglect of altruism ...
In economics, money illusion, or price illusion, is a cognitive bias where money is thought of in nominal, rather than real terms. In other words, the face value (nominal value) of money is mistaken for its purchasing power (real value) at a previous point in time.
The framing effect is a cognitive bias in which people decide between options based on whether the options are presented with positive or negative connotations. [1] Individuals have a tendency to make risk-avoidant choices when options are positively framed, while selecting more loss-avoidant options when presented with a negative frame.
False balance is a bias which usually stems from an attempt to avoid bias and gives unsupported or dubious positions an illusion of respectability. It creates a public perception that some issues are scientifically contentious, though in reality they are not, therefore creating doubt about the scientific state of research.
In cognitive science and behavioral economics, loss aversion refers to a cognitive bias in which the same situation is perceived as worse if it is framed as a loss, rather than a gain. [1] [2] It should not be confused with risk aversion, which describes the rational behavior of valuing an uncertain outcome at less than its expected value.
In a similar vein, Mercier and Sperber describe a theory [51] for confirmation bias, and possibly other cognitive biases, which is a radical departure from the prevalent view, which holds that human reasoning is intended to assist individual economic decisions. Their view suggests that it evolved as a social phenomenon and that the goal was ...
This theory approaches two methods of inquiry including locus of causality and stability. [ citation needed ] Locus of causality reflects on internal characteristics of an individual, such as intelligence levels and attention seeking, with the relationship of the external space such as weather forecasts and task difficulty.