The psychology of spending
Recognise the context and shortcuts behind your choices.
Your route through the ideas
- Projection bias
Overestimating how closely future preferences will resemble how you feel now.
- Anchoring
Allowing an initial reference value to influence a later judgement, even when it is weakly relevant.
- Present bias
Giving disproportionate weight to immediate outcomes compared with later ones.
- Mental accounting
Treating money differently according to the labels or categories assigned to it.
- Loss aversion
Losses may weigh more heavily than comparable gains relative to a reference point.
- Confirmation bias
Giving more attention or weight to evidence that supports an existing belief.
- Decoy effect
An additional option can change preferences between existing options when it is dominated by one of them.