Fun with Psychology – cognitive biases.

What are cognitive biases?

A cognitive bias is a systematic pattern of deviation in judgment. Individuals create their own “subjective reality” from their perception of the input. An individual’s construction of reality, not the objective input, may dictate their behavior in the world. Cognitive biases, however sometimes useful, may sometimes lead to perceptual distortion, inaccurate judgment, illogical interpretation, or what is broadly called irrationality or just fun!

For a larger picture click. 

Now with that out of the way, I would like to share some fun biases I’ve discovered. Who said psychology needs to be dull? Let’s go!

Denomination effect: The tendency to spend more money when it is denominated in small amounts (e.g., coins) rather than large amounts (e.g., bills).

We all know that one, that is the reason your coffee is priced 3.99 instead of 4. On the other hand some people would put coins in a jar and just use the bills? Do know that use? I’ve heard that one but I don’t see any logic in it so I must be influenced by the denomination effect for sure.

Disposition effect: The tendency to sell an asset that has accumulated in value and resist selling an asset that has declined in value.

That one seems logic to me, but clearly it isn’t. I would regret the fact that I put so much money in a product and of course I would love to see the value rise back again when I decide to sell it at least. I guess that is why some people hold on to old things because one day they will be worth more.

Frequency illusion or Baader Meinhof effect: The illusion in which a word, a name, or other thing that has recently come to one’s attention suddenly seems to appear with improbable frequency shortly afterwards.

I mean, yes! When you think about buying something but maybe you’re in doubt, you’ll see the product popping up everywhere. It’s like the outside world is trying to convince you to do it.

Functional fixedness: Limits a person to using an object only in the way it is traditionally used.

Exactly! Do you now the show Project Runway? There is a popular challenge where the contestants need to design clothing from a more unusual material than the one we’re used to. So they come up with toilet paper wedding dresses and plastic bottles sweaters. But try this one out for yourself, now, as an adult. What object can have other uses than the traditional one? Children are masters of this craft. I think that seeing things in a different light that the ‘normal’ one can relax the mind and bring some fun in life.

Gambler’s fallacy: The tendency to think that future probabilities are altered by past events, when in reality they are unchanged. The fallacy arises from an erroneous conceptualization of the law of large numbers. For example, “I’ve flipped heads with this coin five times consecutively, so the chance of tails coming out on the sixth flip is much greater than heads.

Of course it’s not the case because with every single toss you still have 50% to end up with tails and there is no influence whatsoever from past experiences. But I do admit, when cycling to the grocery store, I have some red lights. When I passed three I think that the next one will be green for sure, it just must be!

Berlin’s Ampelmann.

Do you recognize some of this biases? I’m happy to have discovered them so I know when my mind isn’t deducting the fact in a logical way. Or when it does it too logical like in functional fixedness, so I can play with it. The mind and me, we’re becoming best friends.


Resources and additional information.

Picture 2 found here.

More (on) cognitive biases can be found here and here.

42 thoughts on “Fun with Psychology – cognitive biases.

  1. Denomination Effect – So that’s how they call it! 😀 Unfortunately I am way too familiar with this one. I have always been a shopaholic but when it comes to coins….sometimes I even forget that they are also money. If I go to the café and pay only in coins, I will feel like not spending anything at all. 😀 And I do not even want to know how much money I spend cause it will just make me feel guilty.

    Liked by 1 person

    1. Yes I now, for me it changed with the euro. These coins are worth something now. In the past it wasn’t that big of a deal. I take comfort in the fact that when it has a name, I can’t be alone with that kind of thinking 🙂

      Liked by 1 person

      1. Oh yes, I guess with the euro It would be different for me too but our coins are pretty worthless 😀 the most valuable coin is the 200 forints one but 200 forints is only like 60 euro cents

        Liked by 1 person

  2. The cognitive bias codex is quite possibly the best blog image ever!

    My grandma actually won $1 million in the lottery about 25 years ago, and to this day she insists it was because of her system, which was backed up by absolute certainty in believing the gambler’s fallacy.

    Liked by 2 people

  3. I have a piggy bank. Used to be, I put all coins below £1 in it. The objective was to save. Once a year I would empty it and usually had enough for a flight to Paris.
    I use a piggy bank again now, but because of my eyesight. I take everything out of my purse which again is less than £1, but this time it is because when I get to the till, it is easier to see what I am handing over. They closed the nearby branch of the bank down, so now I have no way of paying all these coins in!

    Liked by 2 people

    1. It’s the same here, the small bank are going away. They’ve already filtered out the smallest coins, so prices can go up!
      A piggy bank is a good idea, I let my money roll, I pay especially with the smallest coins 😀

      Liked by 1 person

    1. What a fun game for the grandchildren! I’ve heard another trick. A couple got their children into cleaning the sofa together because every penny found they could keep 🙂

      Not paying with coins would be the denomination effect too because you devalue it to the point of not spending it at all. So by keeping it you don’t spend it immediately but you put it in a jar. Your grandchildren don’t have the denomination effect!

      Liked by 1 person

  4. I had a good laugh with the Frequency Illusion! That is ME! (With far too many things! 😂) Sometimes they’ll appear with an alarming number of repetitions, lol. Maybe just trying to make sure I get the point 😉 Thanks for the interesting post!

    Liked by 1 person

  5. I have definitely experienced the Frequency Illusion, er, frequently! Sometimes I can easily rationalize that I just wasn’t noticing how often that thing or word appeared in my life. However, the weirdest thing is when I think I’ve made up a word or name and then I encounter it in real life.

    Liked by 1 person

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    Liked by 2 people

  7. I have Done Majors in Psychology, and love to see here people comments, I personally start a Psychology Blog, but no Success, But Now I have to change my Mind.. Great

    Liked by 1 person

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