Theoretical Foundations of Cognitive Biases
This chapter conveys a basic understanding of cognitive biases and their underlying theoretical foundations. The first part of this chapter describes the fundamentals of psychology in general and cognitive psychology in particular. The second part introduces the ‘heuristics and biases’ approach and discusses cognitive biases that result from three fundamental heuristics. Subsequently, a selection of further relevant biases is described. The fourth part finally critically discusses the most frequently raised critiques that the ‘heuristics and biases’ approach is confronted with.
KeywordsCognitive Bias Prospect Theory Loss Aversion Hindsight Bias Anchor Effect
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