The Surprising Cost of Bad Memory | The Telescoping Effect | Cognitive Biases in Decision Making скачать в хорошем качестве

The Surprising Cost of Bad Memory | The Telescoping Effect | Cognitive Biases in Decision Making

What is the telescoping effect and how does it impact your finances? Can our memory have a cost to our life? I’ll explain how the telescoping effect, another cognitive bias, relates to money and finance 0:00 - What is the Telescoping Effect Have you ever thought about an event that happened years ago but it feels like it was only a few months ago?Or more common, has there ever been a Friday that you thought about what happened Monday and it feels like forever ago. Not only does the telescoping effect have financial implications, but it happens in ways that you may not even think about. This whole cognitive bias is what is known as the telescoping effect. The telescoping effect is defined as events that happened way in the past seem more recent and recent events seem like that happened a long time ago. 0:00 - The Cost of the Telescoping Effect Let’s say you have a car and every year for four years you end up having to replace a part. In general, you spend about $100 each time every year, So, not totally worth replacing the car yet. But, because of this telescoping effect, when you go to replace a part in the car, you feel like you just spent $100 recently on it. You may think its time to replace it because the maintenance repairs are not worth it. Another example of this cognitive bias would be a marketing campaign for a business. Lets say coke or pepsi releases a new flavor. Your immediate thought may be, didn’t they just release a new flavor recently. So you don’t end up buying it and the marketing of the new product fails When in fact, the last time they released a flavor was a year and a half ago. The last costly example of the telescoping effect and how this cognitive bias relates to finances is the stock market. You may hear that the stock market hit an all time high and your immediate thought may be, didn’t they just hit an all time high recently. Even though, it may have occurred many months ago. 2:15 - Why Does the Telescoping Effect Happen So why does the telescoping effect happen and how do we counteract this cognitive bias? Think of your memories as a row of dominoes Each domino represents a day of memories. On Friday, that would mean you have 3 dominoes or days of memories in between Friday and Monday. But let's say that Tuesday and Wednesday, nothing eventful happened. Then are not dominoes of memory for those two days. So when you recall Monday’s events, they can appear a lot closer.The opposite being true too. 3:10 - How to Counteract the Telescoping Effect So how do you combat the telescoping effect? Well there are two ways to do this, I’ll start from a finance perspective which comes back to one of the most basic things a lot of kids do. Make a dairy. It doesn’t have to be an actual diary, it can be good notes or a good log of events or call it a financial diary. Back to the car example, if I have an accurate log of when I made repairs to the car and how much it cost, I can accurately access it if I need a new car. I have eliminated the cognitive biases and the telescoping effect. Or back to the marketing campaign, rather than just release a new product, you could reference the release date of the old product. Every now and then you will see and ad say something along the lines of, Its been 3 years since our last product update so we’re updating this product now. By referencing the time frame, it helps combat the telescoping effect. Now the second method is by recalling more details. If I ask about events from a week ago, it may seem either more distant or closer in memory than just 7 days ago. But If I ask you to recall specific details, most people have to reconstruct the whole week of memories. By reconstructing all the memories of the week, you can better tell when the actual memory happened. 5:41 - How to Benefit from the Telescoping Effect Well one way is to use this to your advantage when asked about a certain task and why it hasn’t been completed. Rather than reference something 7 days away, try saying about a week ago. By doing this, you’re helping someone remember something as if it was more recent than it actually was. On the reverse end, you could ask someone why it took them 25 days to complete something, rather than ask why it took less than a month to complete something. In the end, there are a lot of ways to benefit from the telescoping effect. Hopefully you found these cognitive bias videos interesting and if so, please give a like button and I will be certain to make more of them!