Opportunity Cost: What It Is and How to Account for It

  Opportunity cost is the value of the best alternative that you miss out on as a result of choosing a different option. For example, if a person chose to invest in a certain venture, their opportunity cost is the money they could have made by investing in a different venture, and namely in the …

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The Verbatim Effect: People Remember Gist Better Than Details

  The verbatim effect is a cognitive bias that causes people to remember the gist of information, which is its general meaning, better than they remember its exact form, which is the way the information was presented and the minor details that it involved. For example, when people read a long text, they’re more likely …

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Memento Mori: Remember That You Will Die

  Memento mori is a Latin phrase that means “remember that you will die”. It is meant to remind you of your own mortality, and of the brevity and fragility of human life. ‘Memento mori’ has been mentioned as an important principle by many people throughout history, and implementing it in your own life can …

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Jumping to Conclusions: When People Decide Based on Insufficient Information

  Jumping to conclusions is a phenomenon where people reach a conclusion prematurely, on the basis of insufficient information. For example, a person jumping to conclusions might assume that someone they just met is angry at them, simply because that person wasn’t smiling at them while they talked, even though there are many alternative explanations …

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The Contrast Effect: When Comparison Enhances Differences

  The contrast effect is a cognitive bias that distorts our perception of something when we compare it to something else, by enhancing the differences between them. This comparison can be either explicit or implicit, simultaneous or at separate points in time, and can apply to various traits, ranging from physical qualities, such as color …

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Homo Economicus: On the False Assumption of Perfect Rationality

  The term homo economicus (‘economic man’) refers to people as they’re portrayed in certain economic theories, where they’re seen as ideal decision-making machines, with flawless rationality, unlimited cognitive capacity, perfect access to information, and a narrow-range of consistent, self-interested goals. Roughly speaking, this means that the homo economicus can be seen as someone who …

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Cui Bono: Why You Should Ask “Who Benefits?”

  Cui bono is a Latin phrase that means “who benefits?”, and is used to suggest that there’s a high probability that those responsible for a certain event are the ones who stand to gain from it. For example, if a certain crime has been committed, ‘cui bono’ suggests that the person who committed that …

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The Golden Rule: Treat Others the Way You Want to Be Treated

  The golden rule is a moral principle which denotes that you should treat others the way you want to be treated yourself. For example, the golden rule suggests that if you would like people to treat you with respect, then you should make sure to treat them with respect too. The golden rule is …

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The Availability Cascade: How Information Spreads on a Large Scale

  An availability cascade is a self-reinforcing process where a certain stance gains increasing prominence in public discourse, which increases its availability to people and which therefore makes them more likely to believe it and spread it further. For example, an availability cascade could occur in a situation where a news story triggers a wave …

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