We can see clearly a causal relationship from a series of event in retrospect, even though during the time those events were happening it’s totally unpredictable.For example, after each election we hear people rationalize whatever the result, even though it’s 50-50 before the election or contrary to the actual result.Before the crisis, only few people can see what’s happening. After the crisis, everyone seems to have seen what’s to come.This bias is dangerous because it makes us think we are better predictor and take too much risks.

Hindsight Bias

We systematically overestimate our knowledge and our ability to predict something. Experts are no different.84% men in France think that they are above average lover. 93% of students in US think they are above average driver.

Overconfidence Effect

People are bombarded with more options than ever. There is a limit and when it is crossed, more choices will destroy the quality of life.We make no choice because of inner paralysis.We make poor decision because we focus only on few criteria to filter lots of options. Sometimes it’s a wrong filter.We feel discontent because we are not sure we have made the best choice.Think carefully about what you want before inspecting options. Aim for good enough, not perfection.

Paradox of Choice

When we have invested some time, effort, or money, while the result is not as expected, we have tendency to carry on, because of that initial investment.This is irrational because the expense has happened and we can’t change the past. Decision about the future must be guided by expected cost and benefit from that point forward.

Sunk Cost Fallacy

Success is more visible than failure, so people are systematically overestimating chances of succeeding.News about startups getting funded makes people forget how high the rate of startup failure actually is.

Survivorship Bias

Professional swimmers have perfect bodies not because of their training. Instead, they become good swimmers because of their physique.Similarly, students from best universities are relatively more successful not just because of the quality of its education, but rather because of their highly selective admission.People mistake what determines the selection with the result.

Swimmer’s Body Illusion

The book is a compilation of 99 logical fallacies and thinking error. I put together only the most relevant to me in this list.

A world-class thinker counts the 100 ways in which humans behave irrationally, showing us what we can do to recognize and minimize these “thinking errors” to make better decisions and have a better life Despite the best of intentions, humans are notoriously bad—that is, irrational—when it comes to making decisions and assessing risks and tradeoffs. Psychologists and neuroscientists refer to these distinctly human foibles, biases, and thinking traps as “cognitive errors.” Cognitive errors are systematic deviances from rationality, from optimized, logical, rational thinking and behavior. We make these errors all the time, in all sorts of situations, for problems big and small: whether to choose the apple or the cupcake; whether to keep retirement funds in the stock market when the Dow tanks, or whether to take the advice of a friend over a stranger. The “behavioral turn” in neuroscience and economics in the past twenty years has increased our understanding of how we think and how we make decisions. It shows how systematic errors mar our thinking and under which conditions our thought processes work best and worst. Evolutionary psychology delivers convincing theories about why our thinking is, in fact, marred. The neurosciences can pinpoint with increasing precision what exactly happens when we think clearly and when we don’t.Drawing on this wide body of research, The Art of Thinking Clearly is an entertaining presentation of these known systematic thinking errors--offering guidance and insight into everything why you shouldn’t accept a free drink to why you SHOULD walk out of a movie you don’t like it to why it’s so hard to predict the future to why shouldn’t watch the news. The book is organized into 100 short chapters, each covering a single cognitive error, bias, or heuristic. Examples of these concepts include: Reciprocity, Confirmation Bias, The It-Gets-Better-Before-It-Gets-Worse Trap, and the Man-With-A-Hammer Tendency. In engaging prose and with real-world examples and anecdotes, The Art of Thinking Clearly helps solve the puzzle of human reasoning.

Understand yourself and those around you.

psychology

Psychology

strategy

Strategy

business

Business

books

Books

Rolf Dobelli is a Swiss author and businessman. He began his writing career as a novelist in 2002, but he is best known internationally for his bestselling non-fiction The Art of Thinking Clearly (2011, English 2013), for which The Times has called him "the self-help guru the Germans love".

Sunk Cost Fallacy

Similar ideas to Sunk Cost Fallacy

Sunk Cost Fallacy

11. Sunk Cost Fallacy:

The Sunk Cost Fallacy