Values and Money
Game we played to learn about budgeting
The Bean Game
a systematic error in thinking because it can cause people to mistakenly assume that other peoples’ lives are significantly better than their own.
Fear of Missing Out / FOMO
Andrew wants to buy a specific model of a new car. He conducts research and finds many resources that highlight the benefits of that car model.
Confirmation bias
The difference between these two groups of people are a core belief around how people make financial decisions.
Behavioral and Traditional Economists
What is typically the first step to overcoming the influence of a cognitive bias?
Awareness
This value gives strong feelings of autonomy and security help us feel in charge of our lives, which can translate to more confidence in financial transactions.
INNER VALUES
This field of economics combines economics and psychology to study why people behave the way they do in the real world
Behavioral Economics
The tendency to conform to the beliefs around you
Herd mentality
Tendency to make decisions about a current situation based on what resources you have already invested in the situation
Sunk Cost Fallacy
[BLANK] on the [BLANK] - helps to overcome cognitive biases. Taps into own's experiences.
REFLECT on the PASS
A person with this value also might prioritize getting more insurance to protect their valuables, and might spend more than others on home and self-care
PHYSICAL VALUES
The tendency to put more value on things you already own
Endowment effect
This is a mental shortcut that influences our thinking and decision-making.
Cognitive Bias
Malik finds himself scrolling on social media and making small, frequent purchases for things he doesn’t really need. He likes the feeling of ordering something and getting it delivered within a few days, but then finds that he keeps coming back for more.
Hedonic Adaptation
Embrace the opposite
Push yourself to believe the opposite of your initial reaction and pay attention to what happens.
THis value may form we handle money is, in part, tied up in our unique family histories.
SOCIAL VALUES
The tendency to return to a baseline level of happiness regardless of whether you go through a positive or negative experience or event
Hedonic Adaptation
This is the percentage of people who make purchases because of FOMO.
60%
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 really well and wants to invest in some of the stocks that have been mentioned in recent posts.
Confirmation bias
Strive for a [BLANK} mindset
GROWTH MINDSET
Those with this value likely think more about the sustainability of their money and generally have more in reserve.
FINANCIAL VALUES
paying without physical cash increase the likelihood that we purchase something
Cashless effect
The tendency people have to be more confident in their own abilities
Overconfidence bias
Tendency to regard losses as more important than gains. (You'd rather not lose than win...)
Loss aversion
Soliciting feedback and perspectives from others. Asking others for their input can help us find potential blind spots and stop us from being overconfident..... is know as THIS WAY to overcome a cognitive bias.
Seek multiple perspectives
These people believe that people make decisions that are rational and based on self-interest.
Favoring our own beliefs
Cognitive bias
The tendency to adopt behaviors, styles, or attitudes because everyone else is doing it.
bandwagon effect
Naomi is considering taking a gap year after graduating high school to travel and do a coding bootcamp. However, she’s doubting her decision because most people from her high school plan to go to a 4-year university after graduating.
Herd mentality
Identify what makes you [blank]
Identify what makes you uncomfortable.
Are there people or situations that rub you the wrong way? Ask yourself what makes you respond this way and whether you could have a bias that's impacting your perspective.