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Showing 187 biases.

Not Enough Meaning

We simplify probabilities and numbers to make them easier to think about

Mental accounting

Description

The tendency for people to divide their money into separate accounts based on subjective criteria, like the source of the money or its intended use.

Example 1:

An employee might be more willing to spend a year-end bonus (seen as "windfall" money) on luxury items than they would be with money from their regular salary, even though all money is fungible.

Example 2:

An employee might be willing to spend extravagantly from a "bonus" account but be very frugal with their regular salary, even though money is fungible. Companies might do this with departmental budgets.

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