Animal Spirits
Animal spirits refers to the emotional and psychological factors that drive human behavior in economic decision-making, including confidence, optimism, and pessimism.
Behavioural Economics
The study of how psychological and emotional factors affect economic decision making among consumers and businesses.
Conflict of Interest
Conflict of interest refers to a situation where an individual or entity’s personal or financial interests conflict with their professional or fiduciary responsibilities, potentially compromising their impartiality or judgment.
Cognitive Dissonance
Cognitive dissonance is the psychological discomfort experienced when a person holds conflicting beliefs or attitudes.
Rational Choice Theory: Definition, Pros, Cons & Examples
Rational choice theory is a concept that assumes people make rational choices which align to their own self-interest.
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Illusory Correlation: Definition & Examples
Illusory correlation occurs when we incorrectly believe that two variables have a relationship with each other. The connection between the two variables is, in effect, an illusion.
Pygmalion Effect: Definition, How it works & Example
The Pygmalion effect is where an individual’s performance is influenced by others’ expectations. In other words, higher expectations lead to higher performance.
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Prospect Theory: Definition & Examples
Prospect theory is based upon the premise that individuals value losses and gains differently.
Groupthink: Definition, Characteristics & Examples
Groupthink is the tendency for individuals to agree with each other in a group setting in order to conform and keep harmony.
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Availability Heuristic: Definition & Examples
The availability heuristic is where recent memories are weighted more significantly.
Hindsight Bias: Definition & Examples
Hindsight bias is where an individual claims to have been able to predict an event after it has happened.