The framing effect is an example of cognitive bias, in which people react to a particular choice in different ways depending on how it is presented; e.g. as a loss or as a gain.[1] People tend to avoid risk when a positive frame is presented but seek risks when a negative frame is presented.[2] Gain… Continue reading 54. Cognitive biases in risk management – Framing – Alex Sidorenko
Tag: Cognition
54. Cognitive biases in risk management – Confirmation bias – Alex Sidorenko
Confirmation bias, also called confirmatory bias or myside bias,[Note 1] is the tendency to search for, interpret, favor, and recall information in a way that confirms one’s preexisting beliefs or hypotheses, while giving disproportionately less consideration to alternative possibilities.[1] It is a type of cognitive bias and a systematic error of inductive reasoning. People display… Continue reading 54. Cognitive biases in risk management – Confirmation bias – Alex Sidorenko
49. Cognitive biases in risk management – Normalcy bias – Alex Sidorenko
The normalcy bias, or normality bias, is a mental state people enter when facing a disaster. It causes people to underestimate both the possibility of a disaster and its possible effects. This may result in situations where people fail to adequately prepare and, on a larger scale, the failure of governments to include the populace… Continue reading 49. Cognitive biases in risk management – Normalcy bias – Alex Sidorenko
48. Cognitive biases in risk management – Overconfidence – Alex Sidorenko
The overconfidence effect is a well-established bias in which a person’s subjective confidence in his or her judgments is reliably greater than the objective accuracy of those judgments, especially when confidence is relatively high. Throughout the research literature, overconfidence has been defined in three distinct ways: (1) overestimation of one’s actual performance; (2) overplacement of… Continue reading 48. Cognitive biases in risk management – Overconfidence – Alex Sidorenko
