Stuff You Should Know

How Cognitive Biases Work

February 10, 2026

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  • Cognitive biases are hardwired mental shortcuts (heuristics) that the brain uses to maintain homeostasis by conserving energy, often leading to predictably irrational decisions that can be exploited by marketers. 
  • The conflict between System 1 (fast, unconscious thinking) and System 2 (slow, deliberate thinking) is demonstrated by phenomena like the Stroop effect, where the faster system interferes with the slower one, and we often use System 2 to rationalize System 1 decisions after the fact. 
  • The Pepsi paradox—where people prefer the taste of Pepsi in blind tests but claim to prefer Coke when the brand is known—illustrates how brand allegiance and context (framing) can override actual sensory preference, a concept explored through behavioral economics principles like prospect theory. 
  • Cognitive biases can be exploited by advertisers using tactics like scarcity ("act now, supplies are limited") and social proof ("these people like this, so you probably should too"). 
  • Cognitive Bias Modification (CBM) is a treatment, potentially for anxiety, that works by exploiting a cognitive bias—such as training the brain to stop over-weighting negative facial expressions by forcing the user to search for positive ones. 
  • AI systems are beginning to exhibit emergent cognitive biases because they rely on heuristics, leading to predictable errors in judgment similar to those made by humans, as discussed in this episode of Stuff You Should Know, How Cognitive Biases Work. 

Segments

Introduction to Homeostasis and Heuristics
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(00:01:20)
  • Key Takeaway: The brain uses mental shortcuts called heuristics to quickly return to a state of homeostasis, avoiding the energy expenditure required for active decision-making.
  • Summary: Homeostasis is the body’s and mind’s desire to return to a normal, even-keel state without exerting excessive effort. Heuristics are decision shortcuts that allow the brain to conserve energy by relying on past experiences rather than analyzing all available information. When heuristics lead to errors by omitting necessary information, the result is a cognitive bias.
Kahneman, Tversky, and Thinking Systems
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(00:04:47)
  • Key Takeaway: Psychologists Daniel Kahneman and Amos Tversky developed the Heuristics and Biases Program, leading to Kahneman’s model of System 1 (fast, unconscious) and System 2 (deliberate) thinking.
  • Summary: Kahneman and Tversky challenged the economic assumption that humans are purely rational actors, forming a partnership to study decision-making errors. System 1 handles rapid, almost unconscious decisions, while System 2 is reserved for more deliberate thought processes. System 1 frequently interferes with System 2, a phenomenon demonstrated by the Stroop effect.
Hindsight and Self-Serving Biases
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(00:14:08)
  • Key Takeaway: Hindsight bias causes people to falsely believe past events were inevitable, while the self-serving bias and fundamental attribution error lead individuals to credit their successes internally and blame external forces for their failures.
  • Summary: Hindsight bias involves rearranging memories after an outcome to make it seem predictable, often driven by a need to feel correct. Self-serving bias dictates that good outcomes are due to personal merit, while bad outcomes are due to external factors. The fundamental attribution error applies the opposite logic to others: their successes are luck, and their failures are their own fault.
Anchoring and Framing Biases
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(00:16:42)
  • Key Takeaway: Anchoring bias shows that the first piece of information received disproportionately influences subsequent judgments, while framing bias demonstrates how presenting the same data using positive or negative language alters decision-making.
  • Summary: Anchoring bias occurs when an initial number or piece of data sets a fixed reference point that is difficult to adjust away from, affecting negotiations and estimations like the length of the Mississippi River. Framing bias shows that people react differently to a 10% death rate versus a 90% survival rate, even though the underlying statistics are identical.
The Pepsi Paradox Explained
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(00:20:11)
  • Key Takeaway: The Pepsi paradox reveals that while consumers state a preference for Coke’s brand identity, they consistently choose Pepsi’s taste in blind taste tests, indicating brand allegiance overrides flavor preference.
  • Summary: The Pepsi Challenge, starting in the mid-1970s, was a blind taste test where participants preferred Pepsi over Coke. Brain imaging studies show that when the brand is unknown, the brain processes the drinks similarly, but when the brand is revealed, Coke activates areas associated with allegiance. This paradox persists, as recent tests show Pepsi Zero Sugar still wins taste tests against Coke Zero Sugar.
Availability and Inattentional Blindness
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(00:23:14)
  • Key Takeaway: The availability heuristic causes reliance on immediately accessible information, often emotionally charged or recent, while inattentional blindness shows that focused attention on one task causes the brain to ignore obvious, unrelated stimuli.
  • Summary: The availability heuristic leads to overestimating the frequency of events that are easily recalled, such as recent plane crashes. Inattentional blindness is demonstrated by the selective attention test where half of participants counting basketball passes fail to notice a person in a gorilla suit walking through the scene.
Dunning-Kruger and Gambler’s Fallacy
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(00:29:37)
  • Key Takeaway: The Dunning-Kruger effect describes how novices overestimate their competence because they do not know what they do not know, while the gambler’s fallacy involves incorrectly perceiving patterns in independent random events.
  • Summary: In the Dunning-Kruger effect, those with low competence in a field overestimate their ability, whereas experts often underestimate how difficult their field should be for others. The gambler’s fallacy causes people to believe past random outcomes influence future independent events, such as expecting a coin toss to land on tails after multiple heads.
Base Rate Fallacy and Mere Exposure
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(00:33:21)
  • Key Takeaway: The base rate fallacy involves prioritizing specific, individualized evidence over general statistical probabilities, while the mere exposure effect dictates that repeated exposure increases liking, even for falsehoods (illusory truth effect).
  • Summary: A person is statistically more likely to be a teacher than a personal trainer, even if they are very athletic, illustrating the base rate fallacy. The mere exposure effect explains why repeated advertising works, as familiarity breeds preference. The illusory truth effect suggests that hearing a lie often enough can cause the brain to accept it as true to reduce cognitive load.
Confirmation Bias and Belief Perseverance
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(00:36:14)
  • Key Takeaway: Confirmation bias is the tendency to seek information supporting existing beliefs and ignore contradictory evidence, which is reinforced by belief perseverance and the backfire effect.
  • Summary: People struggle to break their initial hypotheses, exemplified by an experiment where participants failed to test rules that would disprove their initial assumption about a number sequence (2, 4, 6). Belief perseverance means that even indisputable facts often fail to change deeply held beliefs because those beliefs are tied to personal identity. The backfire effect is the extreme result where contradictory evidence actually strengthens the original, incorrect belief.
Behavioral Economics and Loss Aversion
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(00:46:01)
  • Key Takeaway: Behavioral economics, founded on the predictable irrationality of humans, highlights loss aversion, where the pain of losing is felt more strongly than the pleasure of an equivalent gain.
  • Summary: Richard Thaler built upon Tversky and Kahneman’s work to map predictable human decision errors, contrasting with traditional economics’ assumption of pure rationality. Prospect theory identifies loss aversion, causing people to reject fair gambles if they involve potential loss, such as turning down $10 cash to keep a lottery ticket. Humans also overestimate the probability of rare events, leading to irrational decisions regarding safety.
Combating Cognitive Biases
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(00:55:27)
  • Key Takeaway: Fighting unconscious cognitive biases requires active strategies like delaying decisions, seeking contradictory information, cultivating a growth mindset, and employing methods like Bayesian reasoning.
  • Summary: Simply being aware of biases is insufficient; active steps like delaying snap judgments and seeking information from contradictory sources are necessary. Writing down initial expectations allows for later objective review, combating hindsight bias. Cultivating a growth mindset and using structured probability assessment like Bayesian reasoning help train the brain to approach beliefs as probabilities rather than certainties.
Exploiting Cognitive Biases
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(00:58:42)
  • Key Takeaway: Advertisers commonly exploit cognitive biases like scarcity and social proof to influence consumer behavior.
  • Summary: Recognizing personal biases is necessary for growth instead of constant self-confirmation. Advertisers use scarcity, such as limited supplies, to create a scarcity mindset in consumers. Social proof encourages purchases by suggesting that if others like something, the listener should too.
Cognitive Bias Modification Therapy
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(00:59:12)
  • Key Takeaway: Cognitive Bias Modification (CBM) treats conditions like anxiety by training the brain to counteract existing biases.
  • Summary: CBM can be used for treating anxiety, specifically targeting the tendency to seek out negative facial expressions. The treatment involves repetitive screening tasks, such as finding a single smiley face among many frowny faces. This process trains the brain to reduce the weight it places on negative visual input, effectively using bias against itself.
AI Cognitive Biases Emergence
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(00:59:56)
  • Key Takeaway: Artificial intelligence systems are starting to display emergent cognitive biases due to their reliance on heuristics.
  • Summary: AI systems are showing signs of making predictable errors in judgment, which are classified as cognitive biases. This occurs because AI utilizes heuristics, mirroring the way human brains develop these shortcuts. This development suggests AI is becoming more human-like in its decision-making flaws.
Listener Follow-up: Sebastopol Naming
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(01:00:35)
  • Key Takeaway: The town of Sebastopol, California, was named after the Crimean War siege of Sevastopol following a bar fight comparison.
  • Summary: A listener provided follow-up information confirming the connection between Sebastopol, California, and Sevastopol in the Crimean War. The settlement was originally named Pine Grove before being renamed after a bar fight bystander compared the brawl to the long siege. The area also features the Russian River, suggesting historical Russian influence.
Iron Maiden Apology
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(01:01:37)
  • Key Takeaway: The hosts apologized to Iron Maiden fans for failing to connect the song ‘The Trooper’ to the Crimean War battle.
  • Summary: The hosts acknowledged missing an opportunity to reference the Crimean War when discussing related topics. They apologized to fans who pointed out that the Iron Maiden song ‘The Trooper’ relates to that historical battle. The hosts admitted they were unaware of the specific lyrical connection.
Sponsor Read: Pepsi Paradox
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(01:02:49)
  • Key Takeaway: The episode transitions to a mini-segment explaining the Pepsi Paradox, rooted in 1970s and 80s mall taste tests.
  • Summary: Instead of standard advertisements, the hosts introduce a segment about Pepsi, specifically the Pepsi Paradox. This paradox stems from the results of the Pepsi Challenge conducted in shopping malls during the 1970s and 1980s. The hosts found the resulting paradox to be a super interesting topic to explore.