We simplify probabilities and numbers to make them easier to think about

Deep Dive

All Biases

Mental Accounting

We treat money differently depending on where it comes from, where it's kept, or how it's spent.

Appeal to Probability Fallacy

We assume that because something is possible, it is therefore inevitable or likely.

Normalcy Bias

We underestimate the possibility and impact of disasters, believing things will always function normally.

Murphy's Law

We expect that if something can go wrong, it will go wrong.

Zero-Sum Bias

We mistakenly believe situations are zero-sum (one person's gain must be another's loss) when they are not.

Survivorship Bias

We focus on successful examples while overlooking failures, leading to false conclusions.

Subadditivity Effect

We judge the probability of the whole as less than the sum of probabilities of its parts.

Denomination Effect

We are less likely to spend large bills than their equivalent value in smaller denominations.

Magic Number 7±2

We can only hold about 7 (plus or minus 2) items in short-term memory at once.