16 laws · Cognitive biases & decision-making
Cognitive biases list: how they affect business decisions
The predictable mental shortcuts that mislead owners, managers, and investors — and the simple habits that catch them before they turn into expensive decisions.
Dunning–Kruger Effect
People with low skill in an area tend to overestimate their ability, while experts often underestimate theirs.
Confirmation Bias
People search for, notice, and remember information that confirms what they already believe, and ignore what contradicts it.
Sunk Cost Fallacy
People keep investing in a failing project because of what they have already spent, rather than what it will cost from here.
Survivorship Bias
Drawing conclusions only from the winners who survived, while ignoring the many who failed, leads to false lessons.
Availability Heuristic
People judge how likely something is by how easily examples come to mind, not by actual frequency.
Halo Effect
One positive trait — like looks, fame, or a single success — makes people judge everything else about a person or brand more favourably.
Planning Fallacy
People underestimate how long tasks will take and how much they will cost, even when they know past projects ran over.
Hindsight Bias
After something happens, people believe they predicted it or that it was obvious all along.
Status Quo Bias
People prefer things to stay the same and tend to stick with defaults, even when change would benefit them.
Optimism Bias
People believe they are less likely than others to experience bad outcomes and more likely to experience good ones.
Spotlight Effect
People overestimate how much others notice their appearance, mistakes, and actions.
Baader–Meinhof Phenomenon
After you notice something for the first time, you start seeing it everywhere — and wrongly assume it has become more common.
Yerkes–Dodson Law
Performance improves with stress or arousal up to a point, then declines when pressure gets too high.
Hedonic Treadmill
People quickly adapt to improvements in their lives, so happiness tends to return to a baseline after gains or losses.
Thorndike's Law of Effect
Behaviours followed by satisfying results are more likely to be repeated; those followed by unpleasant results are less likely.
Curse of Knowledge
Once you know something, it is hard to imagine not knowing it — so experts explain things badly to beginners.