12 Biases That Distort Your Decision-Making:

1. Confirmation Bias - We interpret new information as confirmation of our existing beliefs.
2. Availability Bias - We tend to rely on information that is most easily or quickly brought to mind.
3. Action Bias - We prefer to take action rather than stay put. That’s why we often buy or sell prematurely.
4. Zero-Risk Bias - If the risk is perceived as small, we assume there is no risk at all.
5. Overconfidence - We overestimate our knowledge and abilities.
It’s often because we know so little that we can’t have a clearer understanding. (Less knowledge => More confidence)
6. Survivor Bias - This is a type of sampling bias that occurs when we only evaluate successful outcomes and ignore failures.
7. Gambler’s Fallacy - We tend to believe that past events influence the probability of future outcomes.
8. Dunning-Kruger Effect - The less you know, the more confident you are.
The more you know, the less confident you become.
9. Causal Fallacy - We always look for causal relationships.
Therefore, even in completely random data, we can find patterns.
10. Hyperbolic Discounting - We are naturally inclined to prefer immediate gratification (e.g., instant rewards).
Even if future rewards are significantly greater.
11. False Consensus Effect - We often overestimate how much others agree with us.
12. Psychological Denial - When something terrible happens, we tend to fall into denial.