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18 Cognitive Bias Examples Show Why Mental Mistakes Get Made

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18 Cognitive Bias Examples Show Why Mental Mistakes Get Made

18 Cognitive Bias Examples

View the high resolution version of today’s graphic by clicking here.

Out of the 188 cognitive biases that exist, there is a much narrower group of biases that has a disproportionately large effect on the ways we do business.

These are things that affect workplace culture, budget estimates, deal outcomes, and our perceived return on investments within the company.

Mental mistakes such as these can add up quickly, and can hamper any organization in reaching its full bottom line potential.

Cognitive Bias Examples

Today’s infographic from Raconteur aptly highlights 18 different cognitive bias examples that can create particularly difficult challenges for company decision-making.

The list includes biases that fall into categories such as financial, social, short term-ism, and failure to estimate:

Financial biases
These are imprecise mental shortcuts we make with numbers, such as hyperbolic discounting – the mistake of preferring a smaller, sooner payoff instead of a larger, later reward. Another classic financial cognitive bias example is the “Ostrich effect”, which is where one sticks their head in the sand, pretending that negative financial information simply doesn’t exist.

Social biases
Social biases can have a big impact on teams and company culture. For example, teams can bandwagon (when people do something because other people are doing it), and individual team members can engage in blind spot bias (viewing oneself as less biased than others). These both can lead to worse decision-making.

Short Term-isms
One way to ensure a business that doesn’t last? Engage in short term-isms – fallacies that gear your business towards decisions that can be rationalized now, but that don’t add any long-term value. Status quo bias and anchoring are two ways this can happen.

Failure to Estimate
So much about business relies on making projections about the future, and the biases in this category make it difficult to make accurate estimates. Cognitive bias examples here include the availability heuristic (just because information is available, means it must be true), and the gambler’s fallacy (future probabilities are altered by past events).

Want more on cognitive biases? Here are five main biases that impact investors, specifically.

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Data Visualization

Visualized: The Mass of the Entire Solar System

This interactive data visualization illustrates how the different planetary objects in our solar system compare based on their individual masses.

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Visualized: The Mass of the Entire Solar System

In space, everything feels weightless due to the lack of gravity.

So how do you measure the weight of objects in space? You don’t. When it comes to the cosmos, all that matters is mass.

Today’s interactive data visualization comes from Reddit user Ranger-UK, and is designed by Daniel Caroli. It delves into the different masses which make up our solar system, and how they all compare in size.

A Star Is Born

Perhaps not surprisingly, the Sun eclipses all other nearby objects by mass. At the heart of our solar system, this yellow dwarf’s gravity is what holds it all together.

The Sun actually makes up 99.8% of our entire solar system’s mass — and we’re lucky to be living in the other 0.2%. Responsible for all life on Earth, it’s no wonder that various cultures have worshiped the Sun throughout history, and even dedicated deities to it.

Currently in its middle years — the sun is over four billion years old, and it’s predicted to remain stable for another five billion years. After this, it will overtake the orbits of Mercury and Venus and then shrink back to the size of a white dwarf.

Out Of This World

The gas giants are all more than ten times as massive as Earth, even though they’re mainly made up of hydrogen and helium. They dominate the Solar System’s real estate — once the Sun is taken out of the equation, of course.

In order, here’s how the planets stack up:

PlanetCategoryMassRadiusDensity
JupiterGas giant1,898,600 x 10²¹ kg69,911 ±6 km1.326g/cm³
SaturnGas giant568,460 x 10²¹ kg58,232 ±6 km (*without rings)0.687g/cm³
NeptuneGas giant102,430 x 10²¹ kg24,622 ±19 km1.638g/cm³
UranusGas giant86,832 x 10²¹ kg25,362 ±7 km1.27g/cm³
EarthTerrestrial planet5,974 x 10²¹ kg6.371 ±0.01 km5.514g/cm³
VenusTerrestrial planet4,869 x 10²¹ kg6,051.8 ±1 km (*without gas)5.243g/cm³
MarsTerrestrial planet642 x 10²¹ kg3,389.5 ±0.2 km3.9335g/cm³
MercuryTerrestrial planet330 x 10²¹ kg2,439.7 ±1 km5.427g/cm³

Satellites Out of Control

The further away from the Sun you go, the more moons can be found orbiting planets. Earth’s singular moon is the fifth largest of almost 200 natural satellites found in the solar system.

Mars has two moons that don’t make it into the visualization above due to their low masses:

  • Phobos: 1.08×10^16 kg
  • Deimos: 2.0×10^15 kg

Here’s a breakdown of some other moons out there:

  • Jupiter
    Total named: 53
    Biggest moons: Ganymede, Callisto, Io, Europa
    These four can be seen easily with some help from binoculars.
  • Saturn
    Total named: 53
    Biggest moons: Titan, Rhea, Iapetus, Dione, and Tethys
  • Uranus
    Total named: 27
    Biggest moons: Titania, Oberon, Ariel, Umbriel
  • Neptune
    Total named: 14
    Biggest moon: Triton, which is as big as the dwarf planet Pluto.

Pluto and some “leftovers” of the solar system lie in the distant region of the doughnut-shaped Kuiper belt, between 30 to 50 astronomical units (AU) away. Beginning at the orbit of Neptune, the belt encompasses some of those objects in the visualization categorized as “other”.

So far, we’ve only managed to set foot on our own moon. NASA’s Opportunity rover helped us explore the Red Planet virtually for over 14 years, while the Curiosity is still going strong.

Who knows what else lurks beyond the edges of our solar system?

It suddenly struck me that that tiny pea, pretty and blue, was the Earth… I didn’t feel like a giant. I felt very, very small.

— Neil Armstrong, looking back at the Earth from the Moon (July 1969)

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Economy

The $300 Billion Counterfeit Goods Problem, and How It Hurts Brands

Every year, the global economy loses over $300 billion from the sale of counterfeit goods. Here are the problems created by this, and why they matter.

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When you are walking along the boardwalk on vacation, you know it’s a “buyer beware” type of situation when you buy directly from a street vendor.

Those Cuban cigars are probably not Cubans, the Louis Vuitton bag is a cheap replica, and the Versace sunglasses too cheap to be the real thing.

But what if you placed an order for something you thought was truly legitimate, and the fake brand had you fooled? What if this imitation product fell apart in a week, short-circuited, or even caused you direct harm?

Can you Spot a Fake?

Today’s infographic comes to us from Best Choice Reviews, and it highlights facts and figures around counterfeit goods that are passed off as quality brands, and how this type of activity damages consumers, businesses, and the wider economy.

The $300 Billion Counterfeit Goods Problem, and How It Hurts Brands

In 2018, counterfeit goods caused roughly $323 billion of damage to the global economy.

These fake products, which pretend to by genuine by using similar design and packaging elements, are not only damaging to the reputations of real brands – they also lead to massive issues for consumers, including the possibility of injury or death.

A Surprisingly Widespread Issue

While it’s easy to downplay the issue of fake goods, it turns out that the data is pretty clear on the subject – and counterfeit goods are finding their way into consumer hands in all sorts of ways.

More than 25% of consumers have unwillingly purchased non-genuine goods online – and according to a test by the U.S. Government Accountability Office, it was found that two of every five brand name products they bought online (through 3rd party retailers) were counterfeits.

Some of the most common knockoff goods were as follows:

  • Makeup – 32%
  • Skincare – 25%
  • Supplements – 22%
  • Medication – 16%
    • Aside from the direct impact on consumers and brands themselves, why does this matter?

      The Importance of Spotting Fakes

      Outside of the obvious implications, counterfeit activity can open up the door to bigger challenges as well.

    • Economic Impact
      On a macro scale, the sale of counterfeit goods can snowball into other issues. For example, U.S. accusations of Chinese manufacturers for stealing and reproducing intellectual property has been a major driver of tariff action.
    • Unsecure Information
      Counterfeit merchants present higher risks for credit card fraud or identity theft, while illegal download sites can host malware that steals personal information
    • Criminal Activity
      Funds from illicit goods can also be used to help bankroll other illegal activities, such as extortion or terrorism.
    • Unsafe Problems
      It was found that 99% of all fake iPhone chargers failed to pass critical safety tests – and 10% of medical products are counterfeits in developing countries, which can raise the risk of illness or even death.

    The issue of fake goods is not only surprisingly widespread in the online era, but the imitation of legitimate brands can also be a catalyst for more serious problems.

    As a consumer, there are several things you can do to increase the confidence in your purchases, and it all adds up to make a difference.

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