Prospect theory is a behavioral economic theory that describes the way people choose between probabilistic alternatives that involve risk, where the probabilities of outcomes are known. The theory states that people make decisions based on the potential value of losses and gains rather than the final outcome, and that people evaluate these losses and gains […]
Category: Concepts
Risk aversion
Risk aversion is a concept in economics and finance, based on the behavior of humans (especially consumers and investors) while exposed to uncertainty to attempt to reduce that uncertainty. Risk aversion is the reluctance of a person to accept a bargain with an uncertain payoff rather than another bargain with a more certain, but possibly […]
Suggestibility
Suggestibility is the quality of being inclined to accept and act on the suggestions of others. A person experiencing intense emotions tends to be more receptive to ideas and therefore more suggestible. Generally, suggestibility decreases as age increases. However, psychologists have found that individual levels of self-esteem and assertiveness can make some people more suggestible […]
Illusory truth effect
The truth effect, the illusory truth effect or the illusion-of-truth effect is the tendency to believe information to be correct because we are exposed to it more times.
Hubris
Hubris, also hybris, from ancient Greek, means extreme pride or self-confidence. Hubris often indicates a loss of contact with reality and an overestimation of one’s own competence, accomplishments or capabilities, especially when the person exhibiting it is in a position of power. The adjectival form of the noun hubris is “hubristic”. In modern usage, hubris […]
Egotism
Egotism is the drive to maintain and enhance favorable views of oneself, and generally features an inflated opinion of one’s personal features and importance — intellectual, physical, social and other. The egotist has an overwhelming sense of the centrality of the ‘Me’: of their personal qualities. Egotism means placing oneself at the core of one’s world […]
Thinking outside the box
Thinking outside the box (also thinking out of the box or thinking beyond the box) is a metaphor that means to think differently, unconventionally, or from a new perspective. This phrase often refers to novel or creative thinking. To think outside the box is to look farther and to try not thinking of the obvious things, but […]
Reason
Reason is the capacity for consciously making sense of things, applying logic, for establishing and verifying facts, and changing or justifying practices, institutions, and beliefs based on new or existing information. It is closely associated with such characteristically human activities as philosophy, science, language, mathematics, and art, and is normally considered to be a definitive characteristic […]
False in one thing, false in everything
The Latin phrase falsum in uno, falsum in omnibus which, roughly translated, means “false in one thing, false in everything“, is fallacious in so far as someone found to be wrong about one thing, is presumed to be wrong about some other thing entirely. Arising in Roman courts, this principle meant that if a witness was […]
Splitting
Splitting (also called all-or-nothing thinking) is the failure in a person’s thinking to bring together both positive and negative qualities of the self and others into a cohesive, realistic whole. It is a common defense mechanism used by many people. The individual tends to think in extremes (i.e., an individual’s actions and motivations are all good […]