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Saturday, August 27, 2011

Why We Make Mistakes: Post #5--Rose Colored Glasses

We Wear Rose Colored Glasses: When we recall our triumphs in school, we recall getting A’s accurately 89% of the time but remember D’s accurately only 26% of the time. And talk about hindsight bias. When we know how things turned out, our memory of the past is flawed. I heard a lot of this when people were certain that the FBI and other intelligence agencies should have seen 911 coming. When we “remember” things we paint them a nice color. That’s why gamblers recall their losses as “near misses” being oh, so close. Even when you show them, people don’t believe they’re biased. For example, when you show people that their financial advisor might have a conflict of interest, they often ignore it more than they should.

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