Vocab
to look for information that confirms what we already believe.
What is Confirmation bias?
these values reflect what we think or believe about money
What are financial values?
Riley is learning about investing in their personal finance class. After learning the basics of stocks and bonds, they feel confident they can pick winning stocks and want to invest half of their savings in stocks they select.
What is overconfidence bias?
serve as mental shortcuts so that our brains can speed up information processing.
What is cognitive bias impacting our thinking?
Naresh started a new job and is having some of his paycheck deposited directly into a savings account. Which of the following values BEST explains why Naresh does this on a regular basis?
A. Financial
B. Physical
C. Social
D. Inner
What is A? Financial
are beliefs or ideas that you consider important or desirable
What are values?
The tangible aspects of life, the external world, our physical health and well-being
What are physical values?
Grace and her friends have had a long week and have decided to treat themselves to an expensive meal. Unfortunately, the food isn’t very good, but Grace feels like she needs to finish her meal because she already paid for it.
What is sunk cost fallacy?
Only tuning in to news and stories that confirm your opinions
Assuming you are always correct
Attributing other people’s success to luck
Assuming that everyone else share the same opinions or beliefs
Constantly blaming others if things don’t go your way
What are the 5 signs of cognitive bias?
Jerome is checking his bank account and is shocked to see that his account balance is $2. He starts to get frustrated with his parents since they stopped giving him a weekly allowance due to his expensive spending habits.
Which of the following signs of cognitive bias do you recognize in this scenario?
A. Only tuning in to news and stories that confirm your opinions.
B. Attributing other people’s success to luck
C. Constantly blaming others if things don’t go your way.
D. Assuming that everyone else shares the same opinions or beliefs
What is C. Constantly blaming others if things don’t go your way.
The tendency people have to be more confident in their own abilities.
What is overconfidence bias?
Our desire for belonging and relatedness with our family members, neighbors, friends, coworkers and communities
What are Social Values?
Blake’s friends are all going to a music concert. Blake hasn’t saved up enough money to buy the expensive tickets, but they are afraid they’ll miss out on the experience if they don’t go. They’re tempted to take out a personal loan to buy the tickets.
What is FOMO or fear of missing out?
Memory, Decision-making, Behavior, Judgment
The 4 things that cognitive bias can affect?
You go to a restaurant and order a big meal. Even though you’re full, you keep eating because it was expensive. This is an example of...
A. The Endowment Effect
B. Fear of Missing Out
C. Mental Accounting
D. Sunk Cost Fallacy
What is D. Sunk Cost Fallacy
An error in the way we think that can influence our decisions
What is Cognitive bias?
Our personal identity (how we see ourselves) and our social identity (how we believe others see us)
What is Inner Value?
Javier is a part of an online social media group that encourages investing in trending stocks. He always hears about how these stocks are performing well and wants to invest in some of the stocks that have been mentioned in recent posts.
What is confirmation bias?
What are social values, as they pertain to money?
A. How companies and advertisement make you feel about money
B. How you, personally, care and think about finances
C. How banks and other financial institutions treat you and your money
D. How your family, friends, and community members impact your feelings about money
What is D? How your family, friends, and community members impact your feelings about money
The tendency to make decisions about a current situation based on what resources you have already invested in the situation.
What is sunk cost fallacy?
What matters most to you and why you set the goals that you do is a result of what
What is examining your values?
You overhear your friend Ginny say, "I made a budget for myself in my personal finance class and used my values to decide how I want to use my money." What does Ginny mean by this?
A. Ginny followed recommendations she saw on social media to decide how to use her money
B. Ginny identified what is important to her and used that knowledge to decide how to use her money
C. Ginny asked her friends and family for advice to decide how to use her money
D. Ginny used the value of her bank account balance to decide how to use her money
What is B? Ginny identified what is important to her and used that knowledge to decide how to use her money