In order to make good decisions, we use our knowledge and our reasoning. Often, this knowledge and reasoning is sound and solid. However, sometimes, we are swayed by biases or by others manipulating a situation. For example, let’s say you and three friends wanted to rent a house and had a combined target budget of $1,600. The realtor shows you only very run-down houses for $1,600 and then shows you a very nice house for $2,000. Might you ask each person to pay more in rent to get the $2,000...

Hindsight bias leads you to believe that the event you just experienced was predictable, even though it really wasn’t. In other words, you knew all along that things would turn out the way they did. Can you relate this to the phrase "Hindsight is 20/20" now?

Unusual results are those that have a very low chance of occurring. Unusual results can be identified using probabilities and the range rule of thumb. In problems involving probability, unusual results can be observed in 2 instances – an unusually high number of successes or an unusually low number of successes.
According to the range rule of thumb, any value above or below two standard deviations, 2σ  from the mean, μ  is considered unusual.
Maximum unusual value = μ + 2σ
Minimum unusual value...

Coping strategies are methods people use to manage, tolerate, or reduce the effects of stressors. These strategies involve both behavioral and psychological actions to handle stressful situations. One common approach is problem-focused coping, which aims to change or eliminate the source of stress rather than merely addressing its consequences. This method involves taking direct action to resolve the issue causing stress.
For example, consider a student who struggles to understand their...

Carol Dweck introduced the term mindset to describe individuals' beliefs about their intellectual and personal capabilities. These beliefs significantly influence psychological processes such as motivation, goal-setting, and perseverance, ultimately shaping academic and life outcomes. Individuals generally possess one of two mindsets- a fixed or a growth mindset—each promoting different responses to success, failure, and challenge.Fixed vs. Growth MindsetA fixed mindset assumes that one's...

Imagine an asset price that crashes to a low point, rebounds sharply as bargain-hunters step in, and then gradually declines. Such behavior can be modeled with a smooth function whose turning points represent locally overvalued and undervalued regions. A convenient example that captures rebound followed by decay is:The high and low points of this curve are identified using the first derivative test, which determines where the function changes from increasing to decreasing or vice versa. To...