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Information asymmetry: The battle for data

One key element that affects how people behave in different situations is the information they have about the issue. But, generally speaking, people do not possess same levels of information. This difference in the amount of information between two parties is known as information asymmetry.

Cognitive Biases

The Dunning-Krueger Effect

The Dunning-Krueger Effect states that incompetent individuals have more difficulty recognizing their true level of ability than do more competent individuals and that a lack of metacognitive skills may underlie this deficiency. In other words, we tend to overestimate our capabilities.

Cognitive Biases

The Confirmation Bias

The Confirmation bias connotes the seeking or interpreting of evidence in ways that are partial to existing beliefs, expectations, or a hypothesis in hand (Nickerson, 1998). Without a doubt, it is one of the most important biases of the mind, as it affects and limits the process of decision-making and reasoning in us.

Cognitive Biases

The Bandwagon Effect

It is all about the Bandwagon Effect. This cognitive bias makes us believe in something just because a lot of other people including our family, friends and close ones believe it. People adopt certain behaviors just because everybody else is doing it.