Common Fallacies of Human Thought

1) Gambler's Fallacy

The Gambler’s fallacy is the tendency to think that future probabilities are altered by past events, when in reality, they are not. Certain probabilities, such as getting a heads when you flip a (fair) coin, are always the same. The probability of getting a heads is 50%, it does not matter if you’ve gotten tails the last 10 flips. Thinking that theprobabilities have changed is a common bias, especially when gambling. For example, I am playing roulette. The last four spins have landed on black, it has to be red this time right? Wrong! The probability of landing on red is still 47.37% (18 red spots divided by 38 total spots). This may sound obvious, but this bias has caused many a gambler to lose money thinking theprobabilities have changed.

2) Self-fulfilling Prophecy

Self-fulfilling prophecy is engaging in behaviors that obtain results that confirm existing attitudes. A self-fulfilling prophecy is a prediction that causes itself to become true. For example, I believe that I am going to do poorly in school, so I decrease the effort I put into my assignments and studying, and I end up doing poorly, just as I thought. Another common example is relationships; I think my relationship with my significant other is going to fail, so I start acting differently, pulling away emotionally. Because of my actions, I actually cause the relationship to fail. This is a powerful tool used by “psychics” – they implant an idea in your mind, and you eventually make it happen because you think it will.

3) Pareidolia

Pareidolia is when random images or sounds are perceived as significant. Seeing clouds in the shapes of dinosaurs, Jesus on a hot pocket, or hearing messages when a record is played backward are common examples of pareidolia. The common element is that the stimulus is neutral, it does not have intentional meaning; the meaning is in the viewer’s perception.

4) Hyperbolic Discounting

Hyperbolic discounting is the tendency for people to prefer a smaller, immediate payoff over a larger, delayed payoff. Much research has been done on decision-making, and many factors contribute to the individual decision making process. Interestingly, delay time is a big factor in choosing an alternative. Put simply, most people would choose to get 20 dollars today instead of getting 100 dollars one year from today. Normally it makes sense to choose a greater amount of money immediately than less inthe future, as the value of a dollar is worth more today than it is tomorrow. Assume that the interest rate is 9%, at this interest rate, a rational person would be indifferent to taking $91.74 now, or $100 a year from now.

5) Placebo Effect

The Placebo effect is when an ineffectual substance that is believed to have healing properties produces the desired effect. Especially common with medications, the placebo effect has been observed when individuals given a sugar pill for a real ailment report improvement. Placebos are still a scientific mystery. It is theorized that placebos cause an “Expectancy Effect”, (In cases of uncertainty, expectation is what is most likely to happen) individuals expect the pills to cure their ailments, so they feel cured. However, this does not explain how the ineffectual pills actually cause a reduction in symptoms.

Interesting Fact: The term “Placebo” is used when the outcomes are considered favorable, when the outcomes are negative or harmful; the term is “Nocebo”.