Contrast-Misreaction Tendency Bias
Number 14 Of The 25 Cognitive Biases...
We’re constantly over-influenced by contrast as we don't have a baseline.
Examples Of The Contrast-Misreaction Tendency Bias
put one hand in a bucket of hot water and the other hand in a bucket of cold water for a minute.
Immediately remove both hands and place them in a bucket of room temperature water and one hand will still feel hot while the other feels cold – the water is the same temperature however we’re basing the feelings on the contrast of our previous experience (bucket).
We do not have an absolute scale, we only have a contrast scale.
“If you throw a frog into very hot water, the frog will jump out, but if you put the frog in room temperature water and just slowly heat the water up, the frog will die there.”
This ties into contrast, as small change bit by bit can go un-noticed to those (most of us!) that’re not very observant.
When it comes to shopping and sales the over and under inflation of prices is used to influence our decision making (surprise, surprise!)
"Our price today is only $49,95, don't pay $129.95 elsewhere!" <--- this is a prime example and I'm sure you've seen an advertisement like this online or in the newspaper.
How To Avoid Falling Victim To The Contrast-Misreaction Tendency Bias
Do not compare, instead examine things individually on a case by case basis.
Although this isn't as efficient you'll be focused on the one thing or product and will not be able to subconsciously contrast in order to make your decision the way the salesmen wants you to.
Want To Know More About Charlie Munger's Cognitive Biases & How To Dominate Life?
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…these are the same people that spend hundreds of dollars on junk food and alcoholic beverages on Friday and Saturday night.
Delay The Instant Gratification
Don’t adopt the epicurean mentality of “eat, drink and be merry for tomorrow we die.”
You must think long term, you must delay the instant gratification we’re so used to experiencing in this life and invest for tomorrow (stoicism).
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The information in this book is worth well over $65 if read and implemented, the information on investing and cognitive biases is worth its weight in gold.
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