I was born in 1992, six months before the World Wide Web became accessible to the general public. Since then, technology has advanced at a breathtaking pace, transforming the way we live, work, and connect. I watched as wireless phones and cell phones grew smaller and more portable - only for smartphones like the IPhone to completely disrupt how we communicate. Televisions became slimmer, sharper, and evolved into OLED displays. Laptops became sleeker and more powerful. Now, generative AI and large language models can write, create, and process at speeds unimaginable just a decade ago. The environment we live in is changing faster and faster, and this acceleration shows no signs of slowing down. Yet here's the paradox: while technology leaps forward, our brains remain wired as they were in the Neanderthal era. They are not equipped to process the sheer volume and velocity of modern information.
Consider this: every second, our brains receive around 11 million bits of sensory information, but we can only consciously process 50 bits per second. That's like trying to collect a teaspoonful of water from Niagara Falls. The rest is filtered out, leaving us with just a fraction of reality. To illustrate, imagine a library with 220,000 books, representing all the information our brains receive every second. Out of those books, we'd read just one single word from a single page in one book. That's how little we consciously process compared to what's available to us.

To manage this overwhelming flood of information, our brains rely on mental shortcuts, or heuristics, to make decisions quickly and efficiently. However, these shortcuts come at a cost: they often lead to cognitive biases - systematic errors in thinking and judgement that distort our perception of reality. But the problem isn't just about filtering information and shortcuts. It's also about how our brains are structured.
The human brain can be divided broadly into three main parts:

1. 1. The Neocortex: The rational, thinking brain, responsible for logic, reasoning, and higher-level analysis.
2. 2. The Limbic System (featuring the amygdala): Often called the "emotional brain," this part of your brain handles feelings like fear, pleasure, and anger. It’s also much quicker to react than the more logical neocortex. Take a look at the 3D model below to see the key parts of the limbic system, including the amygdala, hippocampus, and hypothalamus.
3. 3. The Brainstem (also known as the reptilian brain): The instinctive brain that controls survival functions like fight-or-flight responses and vital bodily processes.

These three regions often conflict with each other. While the neocortex strives for logic and reason, the limbic system can override it with emotional responses, driven by fear, excitement, or deeply ingrained past experiences. In a world where technology advances at mind-bowling speed, but our brains evolve at a glacial pace, this internal conflict between rational thought, emotional reaction , and instinct becomes a key driver of cognitive biases. These biases aren't just quirks of human thinking - they are the byproducts of a brain struggling to adapt to a world it was never designed for.

In the early 1980s, a groundbreaking research field emerged: behavioral finance. Pioneered by Amos Tversky and Daniel Kahneman, this field demonstrated how cognitive biases unconsciously lead to poor decisions-making. Their research showed that human judgement is systematically influenced by errors and deviations from rationality. Building on this foundation, researchers like Hersh Shefrin categorized these distortions into groups such as heuristics and framing effects. While existing works have made significant contributions to understanding cognitive biases, many approaches remain limited to two-dimensional frameworks, focusing on the interplay between cognition and emotion.

In this article, we go a step further. We propose a three-dimensional framework that integrates cognitive biases into a more comprehensive structure - one that considers not only cognition and emotion but also decision-making phases and temporal orientation.

Two-Dimensional Model: Cognition Meets Emotion

To truly understand why we behave the way we do and make the choices we make, it's important to look at both our thinking processes and our emotions. In the past, these two areas were often studied separately or one was considered more important than the other. But recent developments suggest that a more integrated approach is needed. That’s where our Two-Dimensional Model comes in. It maps out how cognition (thinking) and emotion (feeling) interact, showing how they depend on and influence each other.

The Core Idea

Our model aims to show that thinking and feeling are deeply connected, not just one on top of the other. Think of them as two different but complementary perspectives: one is about “how we think,” and the other is about “what feelings drive that thinking.” Instead of seeing cognition and emotion as separate or one being a part of the other, we can view them as two overlapping dimensions:

• Cognitive Processes (like perception, memory, judgement, decision-making and social understanding) act as an 'information pipeline'.
• Emotional Drivers (such as fear, greed, hope and anxiety) influence how this pipeline works at every step.

This dual approach helps us better understand how emotions can bias our thinking and how our thoughts can shape our emotions.

Structure of the Two-Dimensional Model

Our Model is built around two main axes:

1. 1. Cognitive Dimension
2. 2. Emotional Dimension

Each axis includes specific elements that work together to affect our behavior and decisions.

Cognitive Dimension

This dimension covers the different stages and functions involved in processing information:

• Perception: How we notice and interpret what we see, hear, and feel.
  • Example: Mistaking a neutral facial expression for anger because of personal biases.
    
    
• Memory: How we store and recall information.
  • Example: Remembering facts that supports our beliefs while forgetting those that don't (Confirmation Bias).
    
    
• Judgement: How we evaluate information and make estimates.
  • Example: Overestimating the likelihood of events because similar examples easily come to mind (Availability Bias).
    
    
• Decision-Making: How we choose between different options by weighing risks and rewards.
  • Example: Picking a brand because you feel attached to it, rather than based on quality.
    
    
• Social Cognition: How we understand social interactions, norms, and influences from others.
  • Example: Going along with a group’s opinion to avoid criticism, even if you disagree privately.

Emotional Dimension

This dimension includes various emotions that impact our thinking processes:

• Fear-Based Emotions: Driven by a need for safety and avoiding negative outcomes.
  • Example: Steering clear of risky investments to avoid potential losses.
    
    
• Greed-Related Emotions: Motivated by the desire for more wealth, status, or resources.
  • Example: Engaging in risky trading hoping for big profits, ignoring possible losses.
    
    
• Hope and Optimism: Rooted in positive expectations and confidence in good outcomes.
  • Example: Taking on a big project because you’re optimistic, while underestimating possible challenges.
    
    
• Anxiety-Based Emotions: Caused by stress, uncertainty, and discomfort with ambiguity.
  • Example: Being indecisive in important situations because you fear making the wrong choice.
    
    

At this stage, we could stop here and settle for a straightforward model based on the cognitive and emotional dimensions. Many people would consider this sufficient to explain biases. We could categorize biases within each dimension - cognitive processes handling the structural side of perception, memory, judgment, decision-making, and social cognition, while emotional drivers act as filters that shape, amplify, or dampen these processes. By exploring how these dimensions overlap and interact, we could already gain valuable insights into the origins and mechanics of biases. For most, this approach would be enough. It provides a clear framework for understanding where biases arise and how emotions influence our cognitive systems. It explains, for example, how fear sharpens loss aversion, greed fuels overconfidence, or anxiety heightens the zero-risk bias. It also highlights the evolutionary roots of these tendencies and how they might have once helped us navigate threats or seize opportunities, even if they sometimes misfire in modern contexts.
But we’re not stopping here. While this foundational model is effective and easy to work with, it only scratches the surface. To fully understand how biases emerge and function, we need to take it further. We’ll expand this model to incorporate additional layers, like LeDoux’s fast and slow pathways, to deepen our understanding of how cognition and emotion interplay in more complex ways. This expansion will help us capture a richer, more nuanced picture of biases and their adaptive or maladaptive roles in human behavior. So, while this point might seem like a natural stopping place, we’re choosing to go further. By building on this model, we aim to uncover even more about why our minds work the way they do and how we can use this understanding to make better sense of the biases that shape our decisions and interactions.

LeDoux's Fast and Slow Pathways

To make our Two-Dimensional Model even better, we’re adding some cool insights from neuroscience, specifically Joseph LeDoux’s ideas about how our brains process emotions quickly and slowly. These pathways help us understand how emotions shape our thoughts and actions.
LeDoux talks about two main routes that emotions take to influence how we think and behave: the “Low Road” and the “High Road.”

• The Low Road: Think of this as the fast lane. It’s a quick and direct path where emotions trigger almost immediate reactions. Here, the amygdala sends signals straight to the frontal cortex without much detailed processing. This means you can react instantly to something scary, like jumping back when you hear a loud crash, without even thinking about it. It’s all about speed, making it perfect for keeping us safe in sudden, dangerous situations.

• The High Road: This is the slow lane. Emotions take a more thoughtful and detailed path, passing through several parts of the brain, including the hypothalamus and the somatosensory cortex, before reaching the frontal cortex. This slower process allows us to integrate physical sensations and higher-level thinking. It helps us respond to emotions in a more controlled way, like calming yourself down when you’re stressed by taking deep breaths or thinking through a problem carefully.

By adding LeDoux’s pathways, our model now shows not just how emotions and thoughts influence each other, but also how fast or slow that process happens.

Horizontal Axis - Direction of Influence

• Left Side (Emotion to Thought/Action): Here, emotions lead the way quickly, just like the Low Road. For instance, feeling sudden fear might make you immediately jump back from something dangerous.
• Right Side (Thought/Action to Emotion): On the flip side, your thoughts can shape your emotions slowly, similar to the High Road. For example, carefully solving a problem can help you feel less anxious and more in control.

Vertical Axis - Processing style

• Bottom (Automatic): This end represents quick, subconscious reactions. Think of flinching when you hear a loud noise without even realizing why.
• Top (Thoughtful): This side stands for slower, conscious processing. It’s like reflecting on a tough situation to manage your feelings in a positive way.

Integrating Biases into the Two-Dimensional Model

Now that we’ve laid out our two-dimensional model, we have a great way to organize different cognitive biases. This model looks at how emotions and thoughts or actions influence each other and whether these processes happen quickly or take more time and thought. By placing each bias into one of the four quadrants, we can spot patterns in how our feelings and thinking interact - whether things happen automatically or if we’re deliberately considering them. This makes it easier to recognize biases in our own thinking and find areas where we can make improvements. Let’s dive into some specific cognitive biases and see how they fit into each part of our model with clear examples:

Bottom-Left Quadrant: Low Road Automatic | Emotion -> Thought/Action
Processing Style: Fast and Automatic Emotion

In this quadrant, emotions swiftly and subconsciously drive our actions and thoughts without deliberate consideration.

Affect Heuristic

• Description: The affect heuristic is a mental shortcut where individuals rely on their current emotions and feelings to make decisions, often bypassing logical analysis and objective information. This bias can lead to rapid judgments that are heavily influenced by positive or negative emotions at the moment of decision-making.
  
  
• Example: Imagine you're considering investing in a new technology startup. Although the financial projections are solid and market research is favorable, you feel a surge of anxiety about the volatile nature of the tech industry. This emotional unease causes you to dismiss the investment opportunity without thoroughly analyzing its potential for returns, solely based on your emotional reaction rather than the objective merits of the investment.

Implicit Bias

• Description: Implicit bias refers to the unconscious attitudes or stereotypes that influence our perceptions, decisions, and actions toward different groups of people. These biases operate below the level of conscious awareness and can affect behavior in ways that individuals may not intend or even recognize.
  
  
• Example: During a hiring process, a manager unconsciously favors candidates who share a similar cultural background or attended the same alma mater, believing they will integrate better into the team. This preference occurs without the manager being explicitly aware of their bias, potentially leading to a lack of diversity and the overlooking of more qualified candidates from different backgrounds.

Negativity Bias

• Description: Negativity bias is the tendency to give more weight and attention to negative experiences, information, or feedback than to positive ones. This bias can distort our perception of reality, making negative events seem more significant and memorable than they objectively are.
  
  
• Example: After a team meeting, you receive ten pieces of feedback: nine are positive comments about your presentation, and one is a critical remark about a minor aspect. Despite the majority of positive feedback, the single negative comment lingers in your mind, causing you to focus disproportionately on the criticism and undervalue the overall positive reception.

Representativeness Bias

• Description: Representativeness bias occurs when individuals assess the probability of an event based on how much it resembles existing stereotypes or prototypes, rather than relying on actual statistical probabilities. This can lead to incorrect judgments and decisions.
  
  
• Example: You meet someone who is quiet, enjoys reading, and prefers a structured environment. Based on these traits, you assume they are more likely to be a librarian than a salesperson, even though there are significantly more salespeople than librarians. Your judgment is influenced by how representative the individual appears of the stereotypical librarian, ignoring the statistical reality.

Availability Heuristic

• Description: The availability heuristic is a mental shortcut where people estimate the likelihood of events based on how easily examples come to mind. This bias is often influenced by recent experiences or emotionally charged events, which can distort perception of actual probabilities.
  
  
• Example: After hearing several news reports about airplane crashes, you develop a heightened fear of flying, believing that plane crashes are more common than car accidents. Despite statistical evidence showing that car travel is significantly more dangerous, the dramatic and memorable nature of plane crashes makes them more "available" in your memory, skewing your perception of risk.

Social Proof

• Description: Social proof is the tendency to conform to the actions and behaviors of others, assuming that their collective behavior reflects the correct or best course of action. This bias often leads individuals to follow the crowd, especially in ambiguous situations.
  
  
• Example: When entering a new restaurant, you notice that most tables are occupied and diners seem to be enjoying their meals. Assuming that the restaurant must be good based on others' patronage, you decide to dine there without researching reviews or the menu, relying solely on the behavior of others as a guide.

Authority Bias

• Description: Authority bias is the tendency to attribute greater accuracy and value to the opinions or directives of authority figures, often without critically evaluating the evidence or reasoning behind them. This bias can lead to unquestioning compliance and acceptance of information based solely on the source's perceived authority.
  
  
• Example: A doctor recommends a specific medication for your condition. Trusting the doctor's expertise, you accept the recommendation without seeking a second opinion or researching potential side effects, even if alternative treatments might be equally effective or more suitable for your situation.

Halo Effect

• Description: The halo effect is a cognitive bias where the perception of one positive trait influences the overall judgment of a person, object, or organization. This bias can lead to generalized positive evaluations based on a single characteristic.
  
  
• Example: You meet someone who is physically attractive and, as a result, assume they are also intelligent, kind, and successful. This initial positive impression creates a "halo" that colors your perception of all their other attributes, potentially overlooking their actual abilities or personality traits.

Groupthink

• Description: Groupthink is a phenomenon where the desire for harmony and conformity within a group leads to irrational or dysfunctional decision-making. Members suppress dissenting opinions, fail to critically analyze alternatives, and prioritize consensus over the best possible outcome.
  
  
• Example: In a corporate board meeting, the team quickly agrees on a new marketing strategy without thoroughly examining potential risks or alternative approaches. Members avoid expressing concerns to maintain group cohesion, resulting in a plan that may not be the most effective or well-considered.

Social Loafing

• Description: Social loafing is the tendency for individuals to exert less effort when working in a group compared to when working alone. This bias can occur because individuals feel less accountable and believe their contributions are less noticeable within a group setting.
  
  
• Example: In a group project, some team members may rely on others to complete the bulk of the work, assuming that their individual effort won't significantly impact the overall outcome. This reliance on others leads to a decrease in personal motivation and productivity within the group.

Bandwagon Effect

• Description: The bandwagon effect is the phenomenon where individuals adopt certain behaviors, beliefs, or trends primarily because others are doing so. This bias often leads to conformity and can contribute to the rapid spread of ideas or practices without critical evaluation.
  
  
• Example: A new smartphone model becomes extremely popular on social media. Observing that many of your peers are purchasing and praising it, you decide to buy the same model, even if your current phone is still functioning well and meets your needs, simply because "everyone else is doing it."

Overconfidence Effect

• Description: The overconfidence effect is a cognitive bias where an individual's subjective confidence in their judgments, decisions, or abilities is greater than their objective accuracy or actual performance. This bias can lead to taking excessive risks and underestimating challenges.
  
  
• Example: You believe you can complete a complex project in half the time it actually requires, based on your confidence in your skills and past experiences. This overconfidence leads to poor time management, missed deadlines, and subpar project outcomes because you underestimated the task's complexity.

Recency Bias

• Description: Recency bias is the tendency to give disproportionate weight to the most recent information or experiences when making decisions or judgments. This bias can overshadow earlier data or events, leading to skewed perceptions and decisions.
  
  
• Example: When evaluating a coworker's performance, you focus primarily on their achievements from the past month, ignoring their consistent performance over the entire year. The most recent successes disproportionately influence your overall assessment, potentially overlooking long-term contributions.

Optimism Bias

• Description: Optimism bias is the inclination to believe that positive outcomes are more likely than they actually are, leading individuals to underestimate risks and overestimate their chances of success. This bias can result in insufficient preparation and unrealistic expectations.
  
  
• Example: Planning a business venture, you are overly confident in its success despite market research indicating significant challenges and competition. This optimism leads you to invest insufficient resources and fail to prepare for potential setbacks, increasing the likelihood of failure.

Scarcity Fallacy

• Description: The scarcity fallacy is the belief that something is more valuable or desirable simply because it is perceived as scarce or limited in availability. This bias can drive impulsive decisions and increased demand based on the fear of missing out.
  
  
• Example: A store advertises a limited-time offer on a popular gadget, stating that only a few units are left. Believing the item to be highly valuable due to its limited availability, you purchase it immediately, even if you didn't need it initially, driven by the fear that you might miss out on the opportunity.

Base Rate Neglect

• Description: Base rate neglect is the tendency to ignore or underweight statistical information (base rates) in favor of specific, anecdotal, or vivid information when making judgments or decisions. This bias can lead to inaccurate assessments of probabilities and risks.
  
  
• Example: Imagine you hear a story about a person named John who is a successful software engineer and enjoys hiking. When meeting a new individual who is reserved and loves outdoor activities, you might be tempted to assume they are also a software engineer, based on the vivid story of John. However, statistically, there are far more teachers than software engineers in the population. By neglecting the base rate information—knowing that being a teacher is more common—you overestimate the likelihood that the new individual is a software engineer. This bias leads to incorrect assumptions by focusing on the specific, memorable example rather than the broader statistical reality.

Conjunction Fallacy

• Description: The conjunction fallacy occurs when individuals assume that specific conditions are more probable than general ones, violating the laws of probability. This bias often arises from the desire to create coherent and plausible narratives.
  
  
• Example: You hear a description of someone who is shy, enjoys reading, and is detail-oriented. When asked whether it is more likely that this person is a librarian or a librarian who enjoys reading, you choose the latter, believing it to be more probable. In reality, the probability of two events occurring together (being a librarian and enjoying reading) is always less than or equal to the probability of either one occurring alone.

Reciprocity

• Description: Reciprocity is the social norm of responding to a positive action with another positive action, fostering mutual exchange and cooperation. This bias can influence behaviors by creating a sense of obligation to return favors, even when not necessary.
  
  
• Example: A colleague brings you coffee in the morning. Feeling obliged to reciprocate the kindness, you go out of your way to assist them with a project later in the day, even if it disrupts your own schedule. This sense of obligation to return the favor influences your actions beyond the initial act of kindness.

Liking Bias

• Description: Liking bias is the tendency to favor people, products, or ideas that we find personally likable or attractive. This bias can influence our decisions and judgments, often leading to preferential treatment based on positive feelings rather than objective criteria.
  
  
• Example: During a team assignment, you choose to work with a colleague you personally like and get along with, rather than collaborating with someone who may have stronger skills or more relevant expertise. Your preference is driven by your positive feelings toward them, potentially compromising the quality of the team's work.

Neglect of Probability

• Description: Neglect of probability is a cognitive bias where individuals disregard or misjudge the actual likelihood of events occurring. This bias leads people to make decisions based on factors other than statistical probabilities, such as emotions, anecdotal experiences, or vivid imagery, often resulting in irrational or suboptimal choices.
  
  
• Examples: Consider a person deciding whether to purchase extended warranty coverage for an electronic device. Despite statistical data showing that the probability of the device failing within the warranty period is low, the individual focuses on the fear of potential malfunction and the peace of mind the warranty offers. Consequently, they purchase the warranty, spending additional money on something that may rarely be needed, simply because the negative outcome (device failure) feels more salient than its low probability.

Association Bias

• Description: Association bias involves forming judgments or making decisions based on irrelevant associations or superficial similarities rather than objective analysis. This bias can lead to incorrect inferences and stereotypes, as individuals link unrelated concepts or attributes based on perceived connections.
  
  
• Examples: Ivan Pavlov’s classical conditioning experiments illustrate association bias. Pavlov trained dogs to associate the sound of a bell with food, causing them to salivate upon hearing the bell even when no food was presented. Similarly, individuals may form judgments about people or situations based on irrelevant associations. For instance, if a marketing campaign uses a catchy jingle, consumers might associate the positive emotions elicited by the jingle with the product itself, even if there is no logical connection between the two. This superficial linkage can lead to biased perceptions and decisions based on the strength of the association rather than the actual merits of the product or individual.

Endowment Effect

• Description: The endowment effect is a cognitive bias where individuals ascribe more value to things merely because they own them. This bias causes people to demand a higher price to give up an object than they would be willing to pay to acquire it, leading to an inflated perception of the item's worth based solely on ownership.
  
  
• Examples: You inherit a piece of antique furniture from a relative and decide to sell it. Despite having little knowledge of its market value, you set a high asking price because of the sentimental value and the fact that you own it. Potential buyers, unaware of its sentimental significance, consider the price unreasonable and choose not to purchase it. Your ownership has led you to overvalue the item beyond its objective market price.

Contrast Effect

• Description: The contrast effect is the enhancement or diminishment of a perception or judgment when compared with a recent or simultaneous alternative. This bias occurs because individuals evaluate things relative to other items, making them appear better or worse depending on the context of comparison.
  
  
• Examples: A job applicant is interviewed after two exceptionally qualified candidates. In comparison, the applicant seems less impressive, leading the hiring manager to rate them lower than they might have if evaluated independently. The high standards set by the preceding candidates create a contrast that negatively influences the perception of the third applicant, despite their own qualifications being adequate.

Top-Left Quadrant: High Awareness | Emotion -> Thought/Action
Processing Style: Slow and Deliberative

Here, emotions are consciously recognized and acknowledged, influencing actions and thoughts through more controlled processes.

Mood-Congruent Bias

• Description: Mood-congruent bias is the tendency to interpret information and recall memories that are consistent with one's current emotional state. This bias can reinforce existing moods, making negative or positive feelings more pronounced.
  
  
• Example: If you are feeling sad, you may interpret a neutral comment from a friend as a criticism, aligning with your negative mood. Conversely, when in a happy mood, you might perceive the same comment as supportive or encouraging, consistent with your positive emotional state.

Emotional Reasoning

• Description: Emotional reasoning is the process of believing that something is true because it feels true emotionally, regardless of the evidence or reality. This bias allows emotions to shape perceptions and beliefs, often leading to distorted thinking.
  
  
• Example: You feel anxious about an upcoming presentation, leading you to believe that you will perform poorly, even though you have adequately prepared and have previously succeeded in similar situations. Your anxiety drives the belief in your incompetence, disregarding factual evidence of your capabilities.

Projection Bias

• Description: Projection bias involves assuming that others share the same thoughts, feelings, and perspectives as oneself. This bias can lead to misunderstandings and miscommunications, as individuals project their own experiences onto others without verifying their accuracy.
  
  
• Example: You're excited about a new project and assume that your team members are equally enthusiastic. As a result, you may not communicate effectively about their actual feelings or reservations, leading to potential conflicts or lack of engagement within the team.

Illusory Correlation

• Description: Illusory correlation is the perception of a relationship between two variables when no such relationship exists. This bias often arises from the tendency to notice and remember events that confirm our preconceptions while ignoring those that contradict them.
  
  
• Example: You believe that wearing a specific color shirt brings you good luck because you happened to wear it during a few successful meetings. Despite the lack of any causal link between the shirt color and your success, you perceive a correlation based on those memorable instances.

Emotional Contagion

• Description: Emotional contagion is the phenomenon where individuals catch and experience emotions similar to those of others around them. This bias highlights the impact of social interactions on personal emotional states, often occurring subconsciously.
  
  
• Example: During a stressful day at work, you spend time with a colleague who is visibly upset and anxious. Gradually, you begin to feel anxious as well, mirroring their emotional state despite having no direct reason for your own anxiety.

Cognitive Dissonance

• Description: Cognitive dissonance is the psychological discomfort experienced when holding two or more conflicting beliefs, values, or attitudes simultaneously. This discomfort often motivates individuals to reduce the inconsistency by altering their beliefs or behaviors.
  
  
• Example: You value healthy living but continue to smoke cigarettes. The conflict between your behavior and your belief in maintaining good health creates cognitive dissonance. To alleviate this discomfort, you might justify smoking by downplaying its health risks or convincing yourself that it helps you manage stress.

Self-Serving Bias

• Description: Self-serving bias is the tendency to attribute personal successes to internal factors (such as skill or effort) while blaming external factors (such as luck or other people) for failures. This bias helps maintain self-esteem and protect one's self-image.
  
  
• Example: After receiving a promotion at work, you attribute it to your hard work and competence. However, if you miss a deadline, you blame it on unreasonable expectations from your manager or unforeseen circumstances, rather than acknowledging any personal shortcomings.

False Causality

• Description: False causality occurs when individuals mistakenly believe that one event causes another without sufficient evidence to support the connection. This bias can lead to erroneous conclusions and misguided actions based on perceived, but unfounded, causal relationships.
  
  
• Example: You notice that wearing a particular bracelet coincides with good days at work. Believing that the bracelet brings good luck, you continue wearing it, attributing your positive experiences to its presence despite no actual causal link between the two.

Fundamental Attribution Error

• Description: The fundamental attribution error is the tendency to overemphasize personal characteristics and underestimate situational factors when explaining others' behaviors. This bias leads to attributing actions to inherent traits rather than external circumstances.
  
  
• Example: If a coworker is late to a meeting, you might think they are irresponsible or lazy, rather than considering possible external factors such as traffic delays or personal emergencies. This error overlooks the situational context that may have contributed to their tardiness.

Story Bias

• Description: Story bias is the preference for information that fits into a coherent and compelling narrative, even if it lacks accuracy or completeness. This bias can lead to oversimplification and distortion of facts to create a more satisfying story.
  
  
• Example: Upon learning about a company's sudden success, you create a backstory involving visionary leadership and innovative strategies, ignoring other factors such as market conditions or competitor failures. This constructed narrative simplifies the complex reality, making the success story more engaging but less accurate.

Control Illusion

• Description: Control illusion is the overestimation of one's ability to influence events or outcomes that are largely determined by external factors. This bias can lead to unwarranted confidence and risky behaviors based on the belief in personal control.
  
  
• Example: You believe that performing a specific ritual before a sports event will improve your team's chances of winning, despite the outcome being determined by skill and strategy. This illusion of control leads you to invest time and effort in the ritual, believing it affects the uncontrollable result of the game.

Prognosis Illusion

• Description:Prognosis illusion is the tendency to overestimate one's ability to predict future events accurately. This bias can lead to misplaced confidence in forecasting and planning, often ignoring the inherent uncertainties of future outcomes.
  
  
• Example: Confident in your ability to predict stock market trends, you make aggressive investments based on your forecasts. Despite market volatility and unpredictable factors, your belief in accurate prediction leads to significant financial losses when outcomes don't align with your expectations.

Survivorship Bias

• Description: Survivorship bias is the error of concentrating on the successful examples while overlooking those that failed. This bias can lead to an incomplete understanding of a situation by ignoring the full range of outcomes, particularly the unsuccessful cases that provide critical insights.
  
  
• Example: Reading about successful entrepreneurs who built thriving businesses from scratch may lead you to believe that entrepreneurship is a guaranteed path to success. However, by ignoring the numerous startups that fail, you miss a comprehensive view of the challenges and risks involved in starting a business.

Swimmer's Body Illusion

• Description: The swimmer's body illusion is the confusion between selection factors and results, where individuals attribute certain outcomes to inherent qualities rather than understanding the role of selection processes. This bias leads to incorrect assumptions about cause and effect.
  
  
• Example: Observing that elite swimmers typically have lean physiques, you might conclude that being lean leads to swimming success. However, the reality is that swimmers with lean bodies are more likely to be selected and trained for competitive swimming, making the physique a result of the selection process rather than the cause of their success.

Chauffeur Knowledge Bias

• Description: Chauffeur knowledge bias is the overestimation of one's understanding of a subject based on superficial or limited information. This bias can lead to misguided decisions and overconfidence in areas where one's knowledge is actually lacking.
  
  
• Example: After reading a brief article about cryptocurrency, you feel well-informed and invest heavily without understanding the complexities and risks involved. This overestimation of your knowledge leads to poor investment decisions based on incomplete information.

Bottom-Right Quadrant: Low Road | Thought/Action -> Emotion
Processing Style: Fast and Automatic

In this quadrant, automatic thoughts or actions trigger emotional responses without conscious deliberation

Outcome Bias

• Description: Outcome bias is the tendency to judge the quality of a decision based on its eventual outcome rather than on the information and reasoning available at the time the decision was made. This bias can lead to unfair evaluations of decisions, especially when results are influenced by factors beyond one's control.
  
  
• Example: A risky business strategy leads to a successful product launch. You consider the strategy as highly effective solely because of the positive outcome, ignoring whether the decision was based on sound analysis or merely fortunate circumstances. Conversely, the same strategy might be deemed poor if it had led to failure, regardless of the rationale behind it.

Gambler's Fallacy

• Description: The gambler's fallacy is the erroneous belief that past random events influence the probabilities of future random events. This bias leads individuals to expect that deviations from expected behavior will be corrected in the short term, despite each event being independent.
  
  
• Example: After losing several hands in a row at a casino's roulette table, you believe that a win is "due" and continue betting more heavily. This misconception ignores the fact that each spin is independent, and past losses do not increase the likelihood of future wins, often resulting in greater losses.

Loss Aversion

• Description: Loss aversion is the tendency to prefer avoiding losses over acquiring equivalent gains. This bias implies that the pain of losing is psychologically more impactful than the pleasure of an equivalent gain, influencing decision-making and risk assessment.
  
  
• Example: You are presented with two investment options: one with a potential gain of $100 and another with a potential loss of $100. Despite both options being equally probable, you choose to avoid the investment that carries the risk of loss, even if the potential gains outweigh the risks, due to your aversion to losing money.

Status Quo Bias

• Description: Status quo bias is the preference for the current state of affairs and resistance to change. This bias can lead individuals to favor existing conditions and resist new alternatives, even when change may lead to improved outcomes.
  
  
• Example: Your company introduces a new software system that promises increased efficiency. However, you resist adopting it because you are comfortable with the old system, fearing the learning curve and potential disruptions, despite the new system's clear advantages and benefits.

Framing Effect

• Description: The framing effect is the cognitive bias where people react differently to the same information depending on how it is presented. The way choices are framed—positive or negative—can significantly influence decisions and judgments.
  
  
• Example: A medical procedure is described in two ways: one emphasizes a 90% survival rate, while the other highlights a 10% mortality rate. Although both statements convey the same information, you are more likely to feel positive and opt for the procedure when it's framed as having a 90% survival rate compared to when it's presented with a 10% mortality rate.

Sunk Cost Fallacy

• Description: The sunk cost fallacy is the inclination to continue investing in a project or decision based on the cumulative prior investment (time, money, resources) rather than on the current merits or potential future benefits. This bias can lead to continued commitment despite diminishing returns.
  
  
• Example: You've spent several months developing a product that is not gaining traction in the market. Instead of cutting your losses, you decide to invest more time and resources into marketing the product, reasoning that the initial investment must be justified, even though the data suggests limited potential for success.

Anchoring Bias

• Description: Anchoring bias is the tendency to rely too heavily on the first piece of information encountered (the "anchor") when making decisions. Subsequent judgments and estimates are often adjusted insufficiently away from the anchor, leading to skewed perceptions and decisions.
  
  
• Example: During salary negotiations, the first offer made sets an anchor for the discussion. If the employer initially offers $50,000, you might counter with $55,000, even if your desired salary is higher. The initial anchor influences your subsequent counteroffer, potentially limiting your earning potential.

Hyperbolic Discounting

• Description: Hyperbolic discounting is the tendency to prefer smaller, immediate rewards over larger, delayed rewards. This bias reflects a preference for instant gratification, often leading to procrastination and suboptimal long-term decision-making.
  
  
• Example: Faced with the choice between receiving $100 today or $150 in a month, you choose the immediate $100 despite the greater overall gain from waiting. This preference for immediate reward over a more substantial future benefit exemplifies hyperbolic discounting, potentially leading to financial decisions that favor short-term satisfaction over long-term prosperity.

Zero Risk Bias

• Description: Zero risk bias is the preference for completely eliminating one type of risk, even if it results in a greater overall risk or less favorable outcome. This bias can lead to irrational decision-making by focusing solely on removing a specific risk without considering the broader context.
  
  
• Example: When choosing between two medical treatments, one that has no risk of side effects but is less effective, and another that has a minor risk of side effects but is significantly more effective, you might choose the first option to eliminate risk entirely. This decision ignores the greater benefit and potentially greater overall value of the second option, driven by the desire to avoid any risk.

Winner's Curse

• Description: The winner's curse is a phenomenon in auctions or competitive markets where the winner tends to overpay due to competitive bidding. This bias occurs when participants fail to accurately assess the true value of the item, driven by the desire to win rather than to pay a fair price.
  
  
• Example: In an online auction for a collectible item, multiple bidders drive the price higher as they compete to win. Ultimately, you win the auction by paying significantly more than the item's intrinsic value, driven by the competitive environment rather than a rational assessment of its worth.

Disposition Effect

• Description: The disposition effect is the tendency of investors to sell assets that have increased in value while holding onto assets that have decreased in value. This bias can lead to suboptimal investment strategies, such as realizing gains too early and allowing losses to accumulate.
  
  
• Example: After investing in several stocks, you sell those that have appreciated significantly to secure profits. However, you hold onto stocks that have declined in value, hoping they will rebound, even when analysis suggests they are unlikely to recover. This behavior prevents you from optimizing your investment portfolio and mitigating losses effectively.

Incentive Superresponse Effect

• Description: The incentive superresponse effect occurs when individuals excessively respond to incentives, often leading to unintended and disproportionate behaviors. This bias can result in overcommitment or misallocation of resources in pursuit of rewards.
  
  
• Example: A company introduces a bonus structure for employees who complete the most sales within a quarter. Employees may take on excessive clients or prioritize quantity over quality to maximize their bonuses, leading to burnout, reduced service quality, and potential long-term damage to customer relationships.

Paradox of Choice

• Description: The paradox of choice refers to the phenomenon where having too many options leads to decision paralysis and reduced satisfaction with the chosen option. While some choice is beneficial, an overabundance can overwhelm individuals, making it harder to make decisions and increasing the likelihood of regret.
  
  
• Example: Standing in front of a vast selection of cereal brands in a supermarket, you feel overwhelmed by the number of choices and struggle to decide which one to purchase. The abundance of options leads to stress and indecision, making the decision-making process more difficult and less satisfying.

Action Bias

• Description: Action bias is the preference for taking action rather than remaining passive, especially in situations of uncertainty or crisis. This bias can lead to impulsive decisions and suboptimal outcomes, as individuals prioritize the feeling of doing something over making the best possible decision.
  
  
• Example: During a financial downturn, an investor may hastily sell all their stocks to avoid potential losses, even when a more measured approach would be beneficial. The urge to take immediate action overrides strategic planning, potentially leading to unnecessary financial losses.

Omission Bias

• Description: Omission bias is the tendency to favor inaction or not taking an action over taking one, even when both lead to similar outcomes. This bias often arises from the perception that causing harm through action is worse than allowing harm through inaction.
  
  
• Example: A doctor may hesitate to administer a treatment with potential side effects, preferring to withhold treatment entirely, even if the patient's condition would benefit from it. The bias towards avoiding action leads to a decision that may not serve the patient's best interests.

Beginner's Luck

• Description: Beginner's luck is the phenomenon where novices experience unexpected success in their initial attempts at a new activity or task, often attributing it to luck rather than skill. This bias can create misconceptions about one's abilities and the factors contributing to success.
  
  
• Example: Someone playing their first few games of chess wins against experienced players and attributes their victories to luck rather than recognizing any strategic understanding or improvement. This initial success may lead to overconfidence or misunderstanding of the skills required to excel in the game.

Top-Right Quadrant: High Road | Thought/Action -> Emotion
Processing Style: Slow and Deliberative

This quadrant involves conscious and thoughtful actions or thoughts that deliberately shape emotional responses.

Hindsight Bias

• Description: Hindsight bias is the tendency to believe, after an event has occurred, that one would have predicted or expected the outcome beforehand. This bias can distort memory and self-perception, leading to overconfidence in one's ability to foresee events.
  
  
• Example: After a project's successful completion, you reflect and think, "I knew this would work all along," even if there were significant uncertainties and challenges during the project's execution. This hindsight bias reinforces a false sense of predictability and control over events.

Confirmation Bias

• Description: Confirmation bias is the tendency to search for, interpret, and remember information in a way that confirms one's preexisting beliefs or hypotheses. This bias leads individuals to give disproportionate weight to evidence that supports their views while disregarding or undervaluing contradictory information.
  
  
• Example: A person who believes that a particular dietary supplement is highly effective in improving health will focus on articles and testimonials that praise the supplement. They may dismiss or ignore scientific studies that show no significant benefits or potential risks associated with the supplement. This selective attention reinforces their initial belief, preventing them from making an informed and balanced decision based on all available evidence.

Induction Effect

• Description: The induction effect refers to errors in inductive reasoning, where individuals make generalized conclusions based on limited or specific observations. This bias involves overgeneralizing from a small sample size or assuming that a trend observed in a particular instance will continue universally, often leading to inaccurate or unwarranted conclusions.
  
  
• Example: The classic turkey example demonstrates the induction effect. A turkey is fed by a farmer every day for 1,000 days, experiencing a consistent pattern of care and growth. Based on these observations, the turkey inductively concludes that the world is a benevolent and predictable place. However, on the 1,001st day, the farmer kills the turkey for Thanksgiving. This abrupt and unforeseen event starkly contrasts with the turkey's inductive reasoning based on past experiences, highlighting how limited observations can lead to erroneous generalizations and misplaced trust in patterns that may not hold in the future.

Reappraisal

• Description: Reappraisal is the cognitive process of deliberately changing one's interpretation of a situation to alter its emotional impact. This bias involves reframing perspectives to manage emotions more effectively and respond to challenges with a balanced outlook.
  
  
• Example: Faced with a challenging work assignment, you choose to view it as an opportunity to develop new skills and advance your career, rather than as a source of stress. This reappraisal reduces anxiety and fosters a more positive and proactive approach to the task.

Cognitive Reframing

• Description: Cognitive reframing involves changing the way one thinks about a situation to alter its emotional significance. This technique helps individuals manage negative emotions and develop a more resilient and adaptive mindset.
  
  
• Example: After receiving critical feedback on a report, instead of feeling defeated, you reinterpret the feedback as constructive input that can help you improve your skills. This cognitive reframing shifts your emotional response from discouragement to motivation for growth.

Self-Reflection Bias

• Description: Self-reflection bias involves analyzing one's own thoughts and actions in a way that influences emotional responses, often leading to an overly positive or negative self-assessment. This bias can distort self-perception and hinder objective self-evaluation.
  
  
• Example: After completing a challenging project, you reflect on your contributions and achievements, boosting your self-esteem and feeling more confident about your abilities. Conversely, if the project faces setbacks, you might dwell on perceived personal failures, affecting your emotional well-being despite objective evidence of your efforts.

Regression Towards the Mean

• Description: Regression towards the mean is the statistical phenomenon where extreme outcomes are likely to be followed by more moderate ones. This bias involves recognizing that unusually high or low performances are likely to move closer to the average over time.
  
  
• Example: After achieving an exceptionally high score on a test, you might expect your next score to be just as high. Understanding regression towards the mean, you recognize that your performance is likely to balance out closer to your true average, preventing overestimation of your abilities based on one high performance.

Exponential Growth Bias

• Description: Exponential growth bias is the tendency to misjudge the impact and speed of exponential changes. This bias can lead to underestimating how quickly small, consistent changes can accumulate over time, affecting planning and expectations.
  
  
• Example: When saving money with compound interest, you might underestimate how rapidly your savings can grow over several years. Failing to grasp the exponential nature of compound interest leads to unrealistic expectations about the time and effort required to achieve significant financial growth.

Alternative Paths

• Description: Considering alternative paths involves evaluating different ways to approach a problem, fostering more balanced and effective emotional responses. This bias encourages flexibility in thinking and decision-making, allowing for adaptive and thoughtful solutions.
  
  
• Example: Consider the story of a Russian roulette player who wins $5 million after surviving a deadly game. Buoyed by his victory, he buys a house in a prestigious neighborhood where all his neighbors are successful professionals, such as lawyers and doctors, who have invested 20 years into their properties. However, these neighbors did not survive the Russian roulette game to see the long-term benefits of their investments. This scenario illustrates the alternative paths bias, where the player views his success and the prosperity of his neighbors as a direct result of their choices, ignoring the alternative path where the neighbors could have faced fatal consequences. This bias leads to an overestimation of the role of personal decisions in achieving success, disregarding the randomness and potential alternate outcomes that could have occurred.

Self-Selection Bias

• Description:Self-selection bias occurs when individuals select themselves into a group or situation, influencing the outcomes based on their own characteristics and choices. This bias can lead to unrepresentative samples and skewed perceptions of broader populations.
  
  
• Example: Joining an elite training program because you believe you have what it takes to succeed leads to a group of highly motivated and capable individuals. Observing the success within the group, you might incorrectly assume that the training program guarantees success for all participants, overlooking the role of self-selection in the observed outcomes.

Planning Fallacy

• Description: The planning fallacy is the tendency to underestimate the time, costs, and risks involved in completing a task, while overestimating the benefits. This bias leads to overly optimistic project planning and scheduling, often resulting in delays and budget overruns.
  
  
• Example: When planning to renovate your home, you estimate that the project will take two months and cost $10,000. However, due to unforeseen issues and underestimation of labor and material costs, the renovation actually takes five months and costs $15,000. The planning fallacy caused you to overlook potential challenges and complexities.

Choice Overload (Paradox of Choice)

• Description: Choice overload occurs when having too many options leads to decision paralysis and reduced satisfaction with the chosen option. This bias highlights the challenges of making decisions in environments with excessive alternatives, often resulting in stress and indecision.
  
  
• Example: Shopping for a new laptop, you are presented with dozens of models, each with different specifications and features. The overwhelming number of choices makes it difficult to decide, leading to prolonged deliberation and potential dissatisfaction with the eventual purchase due to the stress of having too many options.

To visualize the placement of these biases within our model, I've created a comprehensive table that categorizes them by quadrant.

The Two-Dimensional Model gives us a solid starting point for understanding how our thoughts and emotions interact. But it’s really just the beginning. Building on this, the Three-Dimensional Framework adds more layers by looking at when decisions are made - whether before, during, or after - and whether we’re focused on the past, present, or future. This extra detail helps us dive deeper into why we have certain cognitive biases. In this expanded model, emotions play a crucial role throughout all these aspects, shaping how strong our feelings are and guiding our thinking at each stage of making a decision. Having covered the essentials of the Two-Dimensional Model, we’re now ready to move forward. In the next chapter, we’ll explore the Three-Dimensional Framework in detail. This new approach will introduce the concepts of decision timing and time orientation, offering a more nuanced understanding of how these additional dimensions influence our cognitive processes and biases. By examining these factors, we can gain a clearer picture of the complexities involved in decision-making and better understand the interplay between our emotions and thoughts across different time frames.

Toward a 3D Framework

Below is a refined and expanded framework that incorporates the two new layers - the decision-making journey (pre-, mid-, and post-decision biases) and the temporal orientation (past, present, future) - into the existing cognitive-emotional model. The goal is to provide a multi-dimensional structure that shows how biases emerge at different stages of cognition, under different emotional influences, at various points in the decision-making process, and with distinct temporal focuses.

Expanding the Model: Decision Phases and Temporal Orientation

Horizontal Axis (Cognitive Pipeline): Tracks the flow of information from Perception through Social Cognition.
Vertical Axis (Decision Timing): Aligns biases with Pre-, Mid-, or Post-decision timing.
Depth Axis (Temporal Orientation): Clarifies whether a bias is Past-, Present-, or Future-oriented.
Emotional Filter (Overlay): Shows how fear, greed, hope, and anxiety can intensify or shape these biases at any given coordinate in the cube.

Let’s build on our current framework by looking at two main parts: Cognitive Processes and Emotional Drivers. Cognitive Processes move in a sequence from perception to memory, then to judgment, decision-making, and finally social cognition. Think of it as the steps your brain takes to process information and make decisions. On the other hand, Emotional Drivers are like filters that shape these cognitive steps. They include emotions such as fear, greed, hope, optimism, and anxiety, all of which can influence how we see things and make choices. Now, we’re adding two new layers to make our model even more detailed: the Decision-Making Journey and Temporal Orientation. The Decision-Making Journey breaks down the decision process into three stages: before the decision (pre-decision), while making the decision (mid-decision), and after the decision (post-decision). Pre-decision biases affect how we gather and remember information before deciding. Mid-decision biases come into play as we choose between options and frame our choices. Post-decision biases influence how we evaluate the outcome and adjust our memories or beliefs after making a choice. Temporal Orientation looks at when these biases occur in time: past, present, or future. Past-oriented biases can twist how we remember past events, present-oriented biases affect our current judgments and perceptions, and future-oriented biases deal with our expectations and predictions. To visualize this, imagine a four-dimensional model. One axis runs horizontally through the Cognitive Processes, another vertically through the Decision-Making Journey, and the third goes into the depth representing Temporal Orientation. Emotional Drivers add another layer, coloring each part of the model based on the emotions influencing the biases. Picture it like a 3D grid or cube where each intersection point represents a specific bias, tinted by the relevant emotions. Let’s look at a few examples to see how this works.
Hindsight Bias affects our memory and judgment after a decision has been made and is focused on the past. Emotions like anxiety or fear might make us look for patterns in our past decisions, while hope or optimism could make us remember our failures less harshly.
Optimism Bias influences our judgment and decisions before or during the decision-making process and is focused on the future. It’s driven by hope and optimism, and sometimes by greed when we’re aiming for bigger rewards.
Availability Bias impacts how we perceive and judge things before making a decision and is centered on the present. If we’re feeling anxious or fearful, we might remember more negative examples, whereas hope can make recent positive experiences stand out.
Lastly, the Sunk Cost Fallacy affects our decisions after we’ve already committed to something, balancing between past investments and future outcomes. It’s driven by fear of admitting failure or hope that sticking with our choice will pay off.
In short, this enhanced framework gives us a detailed, multi-layered way to understand how different biases form and influence our decisions. By looking at the stages of decision-making and the timing of biases, along with cognitive processes and emotional influences, we get a clearer picture of the complexities behind human decision-making.

Fast vs. Slow Pathways in Pre-, Mid-, and Post-Decision

The Decision Timing axis - comprising pre-decision, mid-decision, and post-decision phases - can be further detailed by distinguishing between fast and slow pathways within each phase:

1. Pre-Decision Timing

Fast Pathway: Represents immediate emotional triggers that initiate the decision-making process. These are often subconscious and drive quick responses without extensive deliberation.
Slow Pathway: Involves deliberate emotional considerations that shape the foundational framework of the decision. This pathway engages more reflective and strategic thinking before committing to a choice.

2. Mid-Decision Timing

Fast Pathway: Captures emotional impulses that can swiftly alter the trajectory of a decision. These impulses may lead to spontaneous adjustments based on the current emotional state.
Slow Pathway: Encompasses reflective emotional assessments that refine and optimize the decision process. This pathway ensures that decisions remain aligned with long-term goals and values.

3. Post-Decision Timing

Fast Pathway: Deals with instant emotional feedback that either reinforces or discourages the decision made. This immediate response can affect satisfaction and future behavior.
Slow Pathway: Involves the evolving emotional narratives that influence future decisions. Over time, these narratives contribute to a deeper understanding and reassessment of decision-making patterns.

To demonstrate the practical application of our multi-dimensional framework, let's plot specific cognitive biases within this space, highlighting how they interact across different dimensions.

Plotting Biases in a Multi-Dimensional Space

Below is an example of how you might “plot” ten biases within a 3D-framework. These placements are not absolute - many biases span multiple coordinates because they can arise at different points in the decision process or be influenced by more than one emotion or temporal focus.

1. Confirmation Bias

• Cognitive Process:

  Primarily affects Judgment (and can also color how we Perceive new information).
• Decision Timing:

  Often Pre-Decision (slow pathway): We selectively seek or interpret information that confirms what we already believe before making the decision.

  Also can appear Mid-Decision(fast pathway): Under time pressure, we latch onto confirmatory cues.
• Temporal Orientation:

  Mostly Present-focused, as it guides current interpretation of incoming information.
• Emotional Overlay:

  Strongly fueled by hope or optimism (we want to confirm we’re “right”) or anxiety (fearful of being wrong).
• Example: You’re about to invest in a stock; you look for news stories supporting your bullish outlook and ignore contrary evidence.

2. Endowment Effect

• Cognitive Process:

  Sits at the boundary between Judgment and Decision-Making (we judge our owned item as more valuable and then decide not to sell or trade).
• Decision Timing:

  Often Mid-Decision (slow pathway): When actively considering a transaction (e.g., selling what you already own), we pause because we feel it’s worth more.

  Can also show up Post-Decision as we cling to past purchases.
• Temporal Orientation:

  Mostly Present-focused (how we currently value what we own), but there's also a Past component (we’ve “invested” in it already).
• Emotional Overlay:

  Strongly connected with loss aversion (fear of losing something you have) and hope (we hope it’ll be worth even more).
• Example: You bought a mug for $5 but won’t sell it for less than $10, even though the market price is $5.

3. Hindsight Bias

• Cognitive Process:

  Primarily affects Memory and Judgment (“I knew it all along!”).
• Decision Timing:

  Post-Decision (fast or slow pathway): We reevaluate an outcome after the fact and convince ourselves it was predictable.
• Temporal Orientation:

  Past-oriented.
• Emotional Overlay:

  Often tied to anxiety or fear of looking foolish if we admit we didn’t see it coming; also fueled by hope or optimism in rewriting memories more positively.
• Example: After a company’s bankruptcy, you claim you “knew” it was doomed even though, at the time, you were unsure.

4. Cognitive Dissonance

• Cognitive Process:

  Spans Memory, Judgment, and even into Social Cognition (we modify our beliefs or behaviors to reduce psychological discomfort).
• Decision Timing:

  Can occur Post-Decision (slow pathway): After you choose something, you retroactively adjust beliefs (“That was the right choice, because…”).

  May also appear Mid-Decision (fast pathway) when two conflicting ideas cause immediate discomfort.
• Temporal Orientation:

  Largely Present (reducing tension in the now), but can also involve revising the Past.
• Emotional Overlay:

  Strongly associated with anxiety (internal tension) and sometimes hope (we want to see ourselves positively).
• Example: You decide to purchase a pricey gym membership. Afterward, you convince yourself it’s totally worth it, even if you rarely use it.

5. Overconfidence Bias

• Cognitive Process:

  Primarily in Judgment and Decision-Making (overestimating abilities or knowledge).
• Decision Timing:

  Often emerges Pre-Decision (fast pathway): You jump to a conclusion or set ambitious targets under illusions of your own competence.

  Can persist Mid-Decision: Doubling down on a risky option because you trust your gut more than realistic evidence.
• Temporal Orientation:

  Frequently Future-oriented (overestimating success) but also can skew Present judgments.
• Emotional Overlay:

  Heightened by greed (thinking you can achieve big gains) or optimism.
• Example: You launch a startup expecting immediate success, ignoring cautionary tales or market data that says otherwise.

6. Sunk-Cost Fallacy

• Cognitive Process:

  Dominates Decision-Making, but also influenced by Judgment (we judge our past investments as reasons to continue).
• Decision Timing:

  Primarily Post-Decision (slow pathway): We’ve already invested money/time/effort, so we keep going to “not waste” those resources.

  Also reemerges Mid-Decision: When deciding whether to pivot or keep investing.
• Temporal Orientation:

  Straddles Past (what we’ve already spent) and Future (hoping it will eventually pay off).
• Emotional Overlay:

  Driven by fear of regret or admitting failure, as well as hope that additional effort redeems the investment.
• Example: Even though your business idea is failing, you pour more money into it because you’ve “already spent so much.”

7. Anchoring Bias

• Cognitive Process:

  Highly relevant to Judgement and Decision-Making (initial exposure to a number/idea influences subsequent estimates).
• Decision Timing:

  Mostly Mid-Decision (fast pathway): Quick adjustments around an initial “anchor.”

  Could be Pre-Decision (slow pathway) if you deliberately set the anchor early on.
• Temporal Orientation:

  Largely Present-focused - whatever initial anchor is introduced can shape immediate judgments.
• Emotional Overlay:

  If the anchor triggers hope (“That’s not too high!”) or fear (“That’s way beyond my budget!”), it magnifies the effect.
• Example: You see a $1000 “list price,” so you think $800 is a bargain, even if the item’s real value is $600.

8. Loss Aversion

• Cognitive Process:

  Impacts Decision-Making by weighting potential losses more heavily than gains.
• Decision Timing:

  Mid-Decision (fast pathway): Under time or emotional pressure, we tend to choose the less risky option to avoid loss.

  Also Pre-Decision (slow pathway): We form strategies explicitly aimed at avoiding losses.
• Temporal Orientation:

  Often Future-oriented (fear of what might be lost), but also can reference Past investments.
• Emotional Overlay:

  Dominated by fear (pain of losing is stronger than pleasure of gaining).
• Example: You decline a high-potential investment because the possibility of losing your principal feels worse than any upside gain.

9. Framing Effect

• Cognitive Process:

  Involves Perception (initial interpretation) and Judgement (evaluation based on how information is presented).
• Decision Timing:

  Mid-Decision (fast pathway): A certain wording or context triggers immediate emotional reactions.

  Also Pre-Decision (slow pathway): If you or someone else deliberately sets a framing context before you decide.
• Temporal Orientation:

  Often Present-focused (how we react to the framing of immediate information).
• Emotional Overlay:

  Anxiety or fear if the framing highlights potential losses; hope if it accentuates gains.
• Example: You’re more likely to choose a surgery with a “90% survival rate” than one that’s “10% fatal,” even though they convey the same statistic.

10. Availability Heuristic

• Cognitive Process:

  Starts in Perception (what info is most salient) and strongly shapes Judgement.
• Decision Timing:

  Pre-Decision (fast pathway): Quick recall of recent dramatic events guides your sense of likelihood.

  Mid-Decision (slow pathway): If you deliberately attempt to recall more balanced data, you can offset the heuristic.
• Temporal Orientation:

  Primarily Present (the examples or memories that pop into mind right now).
• Emotional Overlay:

  Fear and anxiety heighten negative recollections (e.g., hearing about a plane crash makes you think flying is extremely dangerous).
• Example: After seeing news reports of shark attacks, you cancel a beach vacation because you assume the risk is high.

This integrated view helps illustrate how each bias is a dynamic phenomenon - shaped not just by our raw cognition but also by our emotions, the moment in the decision process, and how we orient ourselves in time.

Congratulations! You’ve made it to the end of the article. Now, it's time to put what you've learned into action and consider ways to refine your mindset:

1. 1.
   Identify Your Key Biases: Which cognitive biases do you feel affect you the most? Take a moment to reflect on the ones that frequently show up in your decision-making.
2. 2.
   Link Emotions to Thoughts: Think about how your emotions trigger specific thoughts and how those thoughts can, in turn, influence your emotions. This connection is critical to understanding your own mental patterns.
3. 3.
   Pinpoint Your Challenging Quadrant: Reflect on the model we discussed. Which quadrant presents the most challenges for you? This insight will help you focus on areas where you can improve.
4. 4.
   Examine Time Frames: Consider which time frame (past, present, or future) tends to have the most influence on your cognitive biases. Understanding this can help you anticipate and manage these biases more effectively.
5. 5.
   Identify Situational Triggers: In what types of situations do your biases typically arise? Whether it’s during stressful decisions or everyday choices, recognizing these triggers is a powerful step toward minimizing their impact.

For those involved in trading or investing, it’s especially important to analyze which biases affect your decisions. Reflect on how they influence your actions and think about ways to prevent them from interfering with your strategies. Awareness is your most valuable tool. By taking the time to observe and understand these patterns, you’ll be better equipped to make clearer, more rational decisions moving forward.