Hedonic Treadmill

What kind of treadmill is that?  You say, “I know only the treadmills from Horizon, Epic, and  Lifespan.” Like so many of us, I am quite sure that you have spent some time on the Hedonic Treadmill. The Hedonic Treadmill is one that some people are constantly running…

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Herd Behavior or Herding

Mostly, such conformity is a good thing and it’s one of the reasons that societies are able to function (legal system, driving, etc).  Nevertheless, watch out for what you step into when you follow the herd. Herd behavior occurs when investors follow the behavior of…

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Loss Aversion

Social scientists have proven that—emotionally—a loss “weighs” at least twice that of a similar gain.  That might be great for aspiring body-builders, but not so great for us regular Joes. It’s the actual gaining or losing and your feelings about it that…

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Bias from envy and jealousy

Back in 1995, researchers from Harvard asked students/staff which they preferred: Earning $50,000 a year when everyone else around them makes $25,000. Earning $100,000 a year when everyone else around them makes $200,000. Prices of goods and services would be…

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STATUS QUO BIAS

Irrationally wanting things to stay the same, also called inertia.  We do this in part because we want to avoid costs, even when they’re offset by a larger gain, a process psychologists call “Loss aversion”. You hold onto a mutual fund…

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Bandwagon Bias

Believing that something is true only because other people think it is. Whether politicians or stocks, people like being associated with things that are winning, so winners build momentum, not because they deserve it, but because they’re winning. This is…

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