Bias

1. Biases
(Part 2)

5. Choice Overload
• A cognitive process in which people have a
difficult time making a decision when faced with
many options.
• Too many choices might cause people to delay
making decisions or avoid making them
altogether.
• For example, a famous study found that
consumers were 10 times more likely to purchase
jam on display when the number of jams
available was reduced from 24 to 6.
• Less choice, more sales. More choice, fewer sales.

8. Cognitive Dissonance
• A mental discomfort that occurs when
people’s beliefs do not match up with their
behaviors.
• For example, when people smoke (behavior)
and they know that smoking causes cancer
(cognition).

11. Decision Fatigue
• A lower quality of decisions made after a long session
of decision making.
• Repetitive decision-making tasks drain people’s mental
resources, therefore they tend to take the easiest
choice – keeping the status quo.
• For example, researchers studied parole decisions
made by experienced judges and revealed that the
chances of a prisoner being granted parole depended
on the time of the day that judges heard the case.
65% of cases were granted parole in the morning and
fell dramatically (sometimes to zero) within each
decision session over the next few hours. The rate
returned back to 65% after a lunch break and fell again.

12. Decoy Effect
• People will tend to have a specific change in
preferences between two options when also presented
a third option that is asymmetrically dominated.
• In simple words, when there are only two options,
people will tend to make decisions according to their
personal preferences. But when they are offered
another strategical decoy option, they will be more
likely to choose the more expensive of the two original
options.
• For example, when consumers were offered a small
bucket of popcorn for $3 or a large one for $7, most of
them chose to buy the small bucket, due to their
personal needs at that time.
But when another decoy option was added – a medium
bucket for $6.5, most consumers chose the large
bucket.

13. Ego Depletion
• People have a limited supply of willpower, and
it decreases with overuse. Willpower draws
down mental energy – it’s a muscle that can
be exercised to exhaustion.
• For example, a research showed that people
who initially resisted the temptation of
chocolates were subsequently less able to
persist on a difficult and frustrating puzzle
task. Additionally, when people gave a speech
that included beliefs contrary to their own,
they were also less able to persist on the
difficult puzzle.

14. Elimination-By-Aspects
• A decision-making technique. When people
face with multiple options, they first identify a
single feature that is most important to them.
When an item fails to meet the criteria they
have established, they cross the item off their
list of options. Different features are applied
until a single ‘best’ option is left.
• For example, a consumer may first compare
cars on the basis of safety, then gas mileage,
price, style, etc, until only one option remains.

15. Endowment Effect
• Once people own something (or have a feeling of
ownership) they irrationally overvalue it, regarding of
its objective value.
• People feel the pain of loss twice as strongly as they
feel pleasure at an equal gain, and they fall in love with
what they already have and prepare to pay more to
retain it.
• For example, scientists randomly divided participants
into buyers and sellers and gave the sellers coffee mugs
as gifts. Then they asked the sellers for how much they
would sell the mug and asked the buyers for how much
they would buy it.
• Results showed that the sellers placed a significantly
higher value on the mugs than the buyers did.

16. Fear of Missing Out (FOMO)
• An anxious feeling that can happen when you
fear that other people might be having
rewarding experiences that you’re missing.
• Many people have been preoccupied with the
idea that someone, somewhere, is having a
better time, making more money, and leading
a more exciting life.
• According to science, FOMO is associated with
lower mood, lower life satisfaction, and an
increasing need to check social media.

17. Hedonic Adaptation
• People quickly return to their original level of
happiness, despite major positive or negative
events or life changes.
• When good things happen, we feel positive
emotions but they don’t usually last. The
excitement of purchasing a new car or getting
a promotion at work is temporary.
• One study showed that despite initial
euphoria, lottery winners were no happier
than non-winners eighteen months later.

19. IKEA Effect
• A cognitive bias in which people place a
disproportionately high value on products
they partially created.
• For example, in one study, participants who
built a simple IKEA storage box themselves
were willing to pay much more for the box
than a group of participants who merely
inspected a fully built box.

21. Licensing Effect
• When people allow themselves to indulge
after doing something positive first.
• Drinking a diet coke with a cheeseburger can
lead one to subconsciously discount the
negative attributes of the meal’s high caloric
and cholesterol content.
• Going to the gym can lead us to ride the
elevator to the second floor.
• A study showed that people who took
multivitamin pills were more prone to
subsequently engage in unhealthy activities.

22. Loss Aversion
• People’s tendency to prefer avoiding losses to acquiring
equivalent gains. It’s better not to lose $5 than to find
$5.
• The pain of losing is psychologically about twice as
powerful as the pleasure of gaining.
• For example, scientists randomly divided participants
into buyers and sellers and gave the sellers coffee mugs
as a gift. They then asked the sellers for how much
they would sell the mug and asked the buyers for how
much they would buy it.
• Results showed that the sellers placed a significantly
higher value on the mugs than the buyers did. Loss
aversion was the cause of that contradiction.

26. Overjustification Effect
• The loss of motivation and interest as a result of
receiving an excessive external reward (such as
money and prizes).
• When being rewarded for doing something
actually diminishes intrinsic motivation to
perform that action.
• For example, researchers gave children reward
for doing activities they already enjoyed, like
solving puzzles. Then, the children were given an
opportunity to engage in these same activities on
their own, when no rewards would be
forthcoming. The results: children engaged in
these activities less often than they did before.

28. Pain of paying
• Some purchases are more painful than others, and people try to
avoid those types of purchases. Even if the actual cost is the same,
there is a difference in the pain of paying depending of the mode of
payment.
• Purchases are not just affected by the price, utility and opportunity
cost, but by the pain of paying attached to the transactions.
Studies show that people feel the pain of paying the most when they:
• Paying in cash (as opposed to credit card).
• Paying a separate fee/commission (as opposed to fee included in
the total purchase price).
• Paying as they consume (as opposed to one-time payment).
• Paying frequently (as opposed to prepaid).
• Paying on their own (as opposed to receiving a gift from their
partners).

29. Partitioning
• When the rate of consumption decreased by
physically partitioning resources into smaller
units.
• For example, cookies wrapped individually, a
household budget divided into categories (e.g.
rent, food, utilities, transportation etc.).
• When a resource is divided into smaller units,
consumers encounter additional decision
points – a psychological hurdle encouraging
them to stop and think.

30. Peak-End Rule
• People judge an experience largely based on how they felt at its
peak (the most intense point) and its end, rather than on the total
sum or average of every moment of the experience.
• The effect occurs regardless of whether the experience is pleasant
or unpleasant and how long the experience lasted.
• In a research, participants engaged with two experiences: short and
long trial.
In the short trial, they soaked their hands in water at 14 C for 60s.
In the long trial, the same participants soaked their hands in water
at 14 C for 60s and kept their hands under the water for extra 30s at
15 C.
When the researchers asked the participants to choose which trial
to repeat, the majority chose the long trial.
• Similarly, a study showed that in uncomfortable colonoscopy
procedures, patients evaluated the discomfort of the experience
based on the pain at the worst peak and the final ending moments.
This occurred regardless of the procedure length or the pain
intensity.

32. Projection Bias
• The tendency of people to overestimate the degree to
which other people agree with them. People tend to
assume that others think, feel, believe, and behave
much like they do.
• This bias also influences people’s assumptions of their
future selves. They tend to believe that they will think,
feel, and act the same in the future as they do now.
• For this reason, we sometimes make decisions that
satisfy current desires, instead of pursuing things that
will serve our long-term goals.
• For example, if people go to the supermarket when
they are hungry – they tend to buy things they don’t
normally eat and spend more money as a result. This
happens because at the time of shopping they
unconsciously anticipate that their future hunger will
be great as it is now.