The James Altucher Show: The Most Dangerous Mental Error (You don't know you're making!)
Another episode with Sahil Bloom, and it's a really interesting one too! Here's the full thread from Twitter: https://twitter.com/SahilBloom/status/1510249267352457223, make sure you follow him on there.
Listen to the full episode here:
1. Fundamental Attribution Error
(1) Attribute someone else's actions to their character—and not to their situation or context.
(2) Attribute our actions to our situation and context—and not to our character.
We cut ourselves a break, but hold others accountable.
2. Naïve Realism
Humans generally think very highly of themselves.
We tend to believe that we see the world with perfect objectivity.
We also assume that people who disagree with us must be ignorant, uninformed, or biased.
This error sits at the core of many societal problems.
3. The Curse of Knowledge
Experts—or generally intelligent people—make the flawed assumption that others have the same background and knowledge on a topic as they do.
It makes them unable to teach or lead in an effective manner for those still coming up the learning curve.
An all-too-common psychological phenomenon in which people strive for consensus and conformity within a group.
People set aside their own beliefs or principles to adopt those of the group and appease the whole.
Opposition is silent and decision-making falters.
5. Survivorship Bias
History is written by the victors.
Studying and learning from "survivors”—while systematically ignoring "casualties”—creates material distortions in our conclusions.
We overestimate the odds of success because we only read about successes.
6. Loss Aversion
Humans tend to prefer avoiding losses vs. achieving gains.
The pain of losing something is more powerful than the pleasure of winning it.
We will typically do more to avoid losses than we will to seek gains.
We systematically overvalue what we already have.
7. Baader-Meinhof Phenomenon
New awareness of something creates an illusion that it's appearing more frequently.
We constantly notice what is top of mind.
Ever notice that something you just recently observed seems to pop up everywhere?
Like seeing 11:11 on your iPhone clock..
8. Entrenchment Effect
Humans have a damning tendency to use evidence in direct conflict with their position to further strengthen their belief in that position.
We dig in our heels and form a greater attachment to the idea.
We value being right over getting to the truth.
9. The Dunning-Kruger Effect
Humans are notoriously incapable of objective evaluation of their own competency levels.
People with a low ability at a task are prone to systematically overestimate their ability at that task.
Example: Everyone is a genius in a bull market!
10. Spotlight Effect
Humans overestimate the degree to which other people are noticing or observing our appearance or actions.
This keeps people from being themselves due to an irrational fear of judgment.
It's liberating to realize that most people don't really care about you…
11. Bandwagon Effect
Humans are a social species—this allowed us to thrive.
It also creates a strong tendency to do things simply because a lot of other people are doing the same.
"Everyone believes X, so obviously X is true."
Our desire for conformity sways our decision-making.
12. Heaven’s Reward Fallacy
Humans tend to have an expectation that they will be be justly rewarded and praised for all of their hard work and sacrifice.
The reality is that a lot of it goes unnoticed—it's thankless.
The pursuit of external affirmation just breeds resentment.
13. Sunk Cost Fallacy
Sunk costs are economic costs already invested in an activity that cannot be recovered.
We tend to think we should continue with something on the basis of all that we've put in—with no regard for future costs or the likelihood of ultimate success.
14. Ad Hominem
Latin phrase for "to the person”—an attack of the individual rather than the argument.
Instead of addressing the argument and its merits, we attempt to refute the opposition on the basis of personal characteristics.
All-too-common in political—or Twitter—debates.
15. Post Hoc Ergo Propter Hoc
A common but broken argument framework:
• Event B followed Event A.
• Event B was caused by Event A.
Just because B followed A, doesn’t necessarily mean that B was caused by A.
Correlation ≠ Causation.
16. Personal Incredulity
We cannot personally understand or believe something, so we argue that it simply cannot be true.
Complex topics require significant upfront work to understand.
An inability to immediately understand cannot be used to argue the illegitimacy of a claim.
17. The Ikea Effect
People ascribe significantly more value to objects that they have created or assembled, irrespective of the final quality of the object.
We infuse our own self worth into the object, thereby increasing its value in our minds.
18. Confirmation Bias
Humans have a tendency to see and interpret information in a manner that supports previously held beliefs.
New data positive? This idea is a winner.
New data negative? Must have been an error in the experiment.
Very common and very dangerous.
19. The Texas Sharpshooter
A Texan fires a gun at a barn wall and then paints a target around the closest cluster of bullet holes.
We select evidence that supports the conclusion while ignoring evidence that may refute it.
Differences are ignored, similarities are highlighted.
20. The Gambler's Fallacy
Humans are naturally bad with probabilities.
We have a tendency to believe that past events alter future outcomes—even when they clearly have no impact.
Ever thought you were "due for a win" in roulette?
You're falling prey.
21. Availability Bias
Humans evaluate situations based on the most readily available data.
This tends to be the data that can be quickly recalled from our memory.
This is how the news cycle impacts our thinking.
Its persistent negativity cements a belief that the world is dark.