A Set on edgi
Your Brain on Money
Why smart people make dumb financial decisions, on schedule.
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Loss Aversion
Loss aversion is a cognitive bias where losing something hurts more than gaining the exact same thing feels good.
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Prospect theory
Prospect theory is an economic theory describing how real people make decisions involving risk and uncertainty.
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Anchoring effect
The anchoring effect is a bias where people rely too heavily on an initial reference number when estimating values or making financial decisions.
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Mental accounting
Mental accounting explains how people separate identical money into subjective buckets, changing how they spend and evaluate financial decisions.
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Escalation of commitment
Why people double down on failing projects to protect their own past choices, violating standard cost-benefit reasoning.
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Lifestyle creep
Lifestyle creep occurs when higher income leads to higher spending at the same rate, turning optional luxuries into perceived daily necessities.
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Conspicuous consumption
Conspicuous consumption is buying expensive goods or services beyond practical need to publicly display wealth, income, and social status.
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Gambling
Gambling is the wagering of money or something else of value on a random event with the intention of winning a prize.