World 3 · Understanding money
Money psychology
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Why people are not calculators — the biases behind money choices.
By the end of this world
You will recognise the common mental shortcuts behind money decisions, see them in your own choices, and have ways to work with them.
How minds handle money
- Why people don’t behave like calculators — Behavioral economics in one lesson: predictable ways real people depart from “rational” choice. (7 min · Practical)
- Present bias: now beats later — Why something small today can feel worth more than something bigger later — and how to tilt the scales. (7 min · Practical)
- Loss aversion: why losing hurts more — Losing feels stronger than winning the same amount, which quietly shapes what we keep and what we sell. (6 min · Practical)
- Mental accounting: money in invisible jars — We treat money differently depending on where it came from and which “jar” we put it in. (6 min · Practical)
- Anchoring: the first number wins — The first price you see bends every judgement after it — in shops, salaries and negotiations. (6 min · Practical)
Everyday traps
- Sunk costs and seeing what you expect — Why we keep paying for past decisions, and why we notice evidence that agrees with us. (6 min · Practical)
- Emotion in the moment of buying — What happens in the mind in the seconds before an unplanned purchase. (6 min · Practical)
- Social proof, FOMO and status signals — Following the crowd, fearing missing out, and buying things partly for what they say about us. (7 min · Practical)
- Hedonic adaptation: why new wears off — The thrill of a new thing fades faster than we expect, and the next purchase quietly resets the bar. (6 min · Practical)
- What scarcity does to attention — Being short of money — or time — narrows attention in ways that make good decisions harder. (7 min · Deep)
Risk and the mind
- Risk perception and probability — Why vivid risks feel bigger than common ones, and why chance is so hard to judge by feel. (7 min · Deep)
- Overconfidence and optimism bias — Most people think they are above average and that bad things happen to others. Money pays for both. (6 min · Practical)