Quotes About Psychology

The money that has recently been won is called "house money" because in gambling parlance the casino is referred to as the house. Betting some of the money that you have just won is referred to as "gambling with the house's money," as if it were, somehow, different from some other kind of money. Experimental evidence reveals that people are more willing to gamble with money that they consider house money.

The false assumption is that almost all people, almost all of the time, make choices that are in their best interest or at the very least are better than the choices that would be made by someone else.

we will see, loss aversion operates as a kind of cognitive nudge, pressing us not to make changes, even when

quasi-hyperbolic discounting.

the planning fallacy—the systematic tendency toward unrealistic optimism about the time it takes to complete projects.

Econs do not suffer from self-control problems, and so temptation is not a word that exists in the economists' lexicon. As a result, most of the world's regulators have not thought much about the problem. But when the dessert cart comes by, we humans often cave. The next thing we know we are fat.

This scoring system has no effect on the grade you get in the course, but it seems to make you happier.

it is thought to be somehow related to Adam Smith's invisible hand, the workings of which are both overstated and mysterious.

choices depend, in part, on the way in which problems are described.

Choosers are human, so designers should make life as easy as possible.

Knowing something about the cognitive system has allowed others to discover systematic biases in the way we think.

He tried his hand at doing some research on the psychology of the stock market, but grew frustrated with the reactions he got from the referees at mainstream finance and economics journals and eventually abandoned the research program.

For most of us, however, self-control issues arise because we underestimate the effect of arousal.

We will call something "tempting" if we consume more of it when hot than when cold. None of this means that decisions made in a cold state are always better. For example, sometimes we have to be in a hot state to overcome our fears about trying new things.

Similarly, people are far more likely to splurge impulsively on a big luxury purchase when they receive an unexpected windfall than with savings that they have accumulated over time, even if those savings are fully available to be spent.

As for information and educational campaigns, one of the main lessons from psychology is that it is impossible for such programs to be "neutral," regardless of how scrupulously designers try to achieve that goal. So to put it simply, forcing people to choose is not always wise, and remaining neutral is not always possible.

people who are threatened with big losses and have a chance to break even will be unusually willing to take risks

Once you recognize the break-even effect and the house money effect, it is easy to spot them in everyday life. It occurs whenever there are two salient reference points, for instance where you started and where you are right now. The house money effect—along with a tendency to extrapolate recent returns into the future—facilitates financial bubbles.

If people are running risks because of unrealistic optimism, they might be able to benefit from a nudge. In fact, we have already mentioned one possibility: if people are reminded of a bad event, they may not continue to be so optimistic. Gains

Compare subliminal advertising to something just as cunning. If you want people to lose weight, one effective strategy is to put mirrors in the cafeteria.

if you want people to comply with some norm or rule, it is a good strategy to inform them (if true) that most other people comply.

So, we experience life in terms of changes, we feel diminishing sensitivity to both gains and losses, and losses sting more than equivalently-sized gains feel good.

Roughly speaking, losses hurt about twice as much as gains make you feel good.

The fact that a loss hurts more than an equivalent gain gives pleasure is called loss aversion. It has become the single most powerful tool in the behavioral economist's arsenal.