Unit 1 Vocabulary

When a person mistakenly believes they are better than others

• Overprecision

• Overestimation

• Overplacement

• Overjustification

The subfield of economics that applies psychological insights into human behavior and to explain economic decision making

• Macroeconomics

• Confirmation Bias

• Behavioral Economics

• Hedonic Adaptation

The tendency to feel anxiety/fear that an exciting or interesting event may currently be happening elsewhere, often aroused by posts seen on a social media website

• Sunk Cost Fallacy

• Hedonic Application

• FOMO (Fear of Missing Out)

• Confirmation Bias

The tendency to regard losses as considerably more important than gains of comparable magnitude

• Loss Aversion

• Cognitive Bias

• Endowment Effect

• Sunk Cost Fallacy

The tendency people have to be more confident in their own abilities

• Overconfidence Bias

• Herd Mentality

• Hedonic Adaptation

• Confirmation Bias

The tendency to conform to the behaviors and beliefs of the people around you

• Herd Mentality

• Endowment Effect

• Loss Aversion

• Confirmation Bias

A subconscious error in thinking that leads to irrational decision making

• Cognitive Bias

• Overconfidence Bias

• Loss Aversion

• Confirmation Bias

The tendency to make decisions about a current situation based on what resources you have already invested in the situation

• Loss Aversion

• Sunk Cost Fallacy

• Confirmation Bias

• Sunk Costs

A strategy used to combat loss aversion by imagining that overnight something you own has been replaced with cash, then determining whether you would prefer to keep the cash or buy the item back

• Herd Mentality

• Cognitive Bias

• Overnight Test

• Hedonic Adaptation

The tendency to search for information that supports our preconceptions and to ignore or distort contradictory evidence

• Cognitive Bias

• Loss Aversion

• Overconfidence Bias

• Confirmation Bias