Why do we expect previous successful performance to lead to future successful performance?

What is the Hot-hand Fallacy?

The hot-hand fallacy is the tendency to believe that someone who has been successful in a task or activity is more likely to be successful again in further attempts. The hot-hand fallacy derives from the saying that athletes have “hot hands” when they repeatedly score, causing people to believe that they are on a streak and will continue to have successful outcomes.

Why we feel the past is better compared to what the future holds

What is Declinism?

Declinism is the tendency to see the past in an overly positive light and to view the present or future in an overly negative light, leading us to believe that things are worse than they used to be. Declinism is often a feeling harbored about the overall state of a country, society, or institution, with the view that it is in decline or getting worse.

Why can we not perceive our own abilities?

What is the Dunning-Kruger Effect?

The Dunning-Kruger effect effect occurs when a person’s lack of knowledge and skills in a certain area cause them to overestimate their own competence. By contrast, this effect also causes those who excel in a given area to think the task is simple for everyone, and underestimate their relative abilities as well.

Dunning–Kruger Effect

The more I learn, the more I realize how much I don’t know.

– Albert Einstein

Why do we tend to favor brands that show care for societal issues?

What is the Noble Edge Effect?

When companies demonstrate social responsibility that is perceived as genuine by consumers, they are rewarded with increased respect, which in turn leads to greater profits. That’s the noble edge effect.

Why we tend to prefer spreading limited resources evenly across options.

What is Naive Allocation?

Naive allocation, otherwise known as naive diversification, or the diversification bias, refers to our tendency to equally divide our resources among the options available to us, regardless of whether the options themselves can be considered equal.

Why rewards of unknown sizes tend to motivate us more than known rewards

What is the Motivating-Uncertainty Effect?

We often find ourselves to be more motivated by rewards of unknown magnitudes than by known rewards because the uncertainty makes it feel like a game. However, this effect, which is known as the motivating uncertainty effect, only occurs when we focus on the journey towards the reward and not when we focus on actually winning the reward.

Why do we think less about some purchases than others?

What is Mental Accounting?

Mental accounting explains how we tend to assign subjective value to our money, usually in ways that violate basic economic principles.1 Although money has consistent, objective value, the way we go about spending it is often subject to different rules, depending on how we earned the money, how we intend to use it, and how it makes us feel.

mental accounting

Why do we treat our in-group better than we do our out-group?

What is In-group Bias?

In-group Bias (also known as in-group favoritism) is the tendency for people to give preferential treatment to others who belong to the same group that they do. This bias shows up even when people are put into groups randomly, making group membership effectively meaningless.

In Group Bias

Why do we think some things are related when they aren’t?

What is illusory correlation?

Illusory Correlation is when we see an association between two variables (events, actions, ideas, etc.) when they aren’t actually associated.