Photo: Royal Society Of Account Planning
What are cognitive biases?In essence, they are the way humans come to incorrect conclusions. You think you’re right, but you actually have no idea. Barry Ritholtz recently published a presentation, released by the Royal Society of Account Planning, states the following:
“Such biases are thought to be a form of ‘cognitive shortcut,’ often upon rules of thumb, and include errors in statistical judgment, social attribution, and memory. These biases are a common outcome of human thought, and often drastically skew the reliability of anecdotal and legal evidence. The phenomenon is studied in cognitive science and social psychology.”
Basically, you shouldn’t go convincing yourself that you have your best interests at heart. Check out how society ultimately judges itself. Across business disciplines — notably investing, but not solely — cognitive biases are extremely important.
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