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Showing posts from March, 2017

Biases Affecting Your Brain and Financial Decision Making, As Told By Real Vs. Imagined Crime

Crime in America is totally out of control these days, right? Every day you read about some new shooting, robbery, kidnapping etc., and the impression you get is that we live in an age where the streets are not safe and neither is your home. Some of this phenomenon is not crime-related at all. Rather, it is in part stemming from a cognitive bias our brains experience called the recency or availability bias. From Wikipedia, “The tendency to overestimate the likelihood of events with greater "availability" in memory, which can be influenced by how recent the memories are or how unusual or emotionally charged they may be.”  This bias shows may perpetrate your brain after being exposed to various emotionally charged stories and experiences. With money, for example, in the Great Recession in 2008, the recency bias may have caused you to think that the stock market is only going to continue to go down and not recover, given the recency, availability of information and media stori…