Introduction The Denomination Effect is a cognitive bias that occurs when people assign different values to money based on its physical denomination or label, rather than its actual purchasing power. This mental model has significant relevance in decision-making processes, as it affects how individuals perceive and make choices related to money. Anchored in human psychology, […]
Introduction Incentives play a pivotal role in shaping our decisions, whether at a personal, business, or policy level. Understanding the concept of incentives and how they influence our behavior is crucial for making informed choices and avoiding potential pitfalls. Anchored in human psychology, the study of incentives sheds light on why we often act in […]
Introduction In the realm of decision-making, our minds often fall prey to cognitive biases that lead us astray from rational choices. One such cognitive bias is the Base Rates mental model. Base Rates refer to the underlying probability or prevalence of an event within a given population. Understanding this concept is crucial for making informed […]
Introduction In the realm of decision-making, the concept of the Tipping Point holds significant relevance. It refers to the critical moment when a situation, idea, or trend reaches a threshold and undergoes a dramatic and irreversible change. Anchored in human psychology, the Tipping Point influences our day-to-day lives, shaping personal choices, business strategies, and public […]
Introduction In the realm of decision-making, there is a pervasive bias known as the Action Bias. It refers to our tendency to favor taking action over inaction, even when inaction may be the more rational choice. Anchored in human psychology, this mental model influences our decision-making processes and has a significant prevalence in our day-to-day […]
Introduction In the intricate realm of decision-making, our choices are often influenced by a myriad of factors, both conscious and subconscious. One such psychological phenomenon that exerts a powerful sway over our judgment is the Kantian Fairness Tendency. Rooted in the teachings of the philosopher Immanuel Kant, this mental model revolves around the innate human […]