Psychological Principles

• Dunning-Kruger effect: incompetent people tend overestimate their own skills and fail to recognize genuine skill.

According to the Dunning-Krueger Effect, people who don’t know much, don’t know that they don’t know, and instead think that they know a lot.

• Forer effect: we tend to estimate that statements about ourselves are highly accurate if we believe they were specifically tailored to us, even if the statements are completely generic.
• Pollyanna principle: our perceptions and memories are biased towards the positive.
• Loss aversion: we assign higher negative utility to losing something that we own than we do positive utility to acquiring the same thing.
• Bystander effect: we diffuse responsibility and defer judgments to the hive mind, which, in a situation where a mass of people fail to take necessary action, perpetuates apathy instead of action.
• Social comparison bias: we tend not to recommend people who surpass our own abilities in the relevant dimension on which we, ourselves, have a high standing.
• Endowment effect: we value something more after we personally assert ownership over it.
• People who were right a lot of the time are people who often changed their minds.