Zero Bias

Alexandros

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14 Zero Bias

by Alexandros

17th Nov 2010

1 min read

14

It seems another bug in the human brain is being uncovered:

"Whereas a 20 percent interest rate may look very large compared to one percent, it may not look as large compared to zero percent. Zero eliminates the reference point we use to assess the size of things,"

http://www.scienceagogo.com/news/20101015200630data_trunc_sys.shtml

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[-]JGWeissman15y50

In the credit card example, 0% interest prompts me to ask "What's the catch?"

[-]Zvi15y10

At work we have highly variant results, and it has a huge effect on my decisions knowing that it's far more important in terms of how I am perceived (and how I feel, even though I know better) to go from -100 to +100 than to go from +100 to +1000.

[-]Manfred15y00

Interesting, thanks.

[-]xamdam15y00

Interestingly 0 as in "free stuff" is also often mispriced (hence all the 'free offers' you get in the mail).

[-]InquilineKea15y00

Yup, Dan Ariely often talks about this in his books.

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