The narrative fallacy is a concept in behavioral economics that refers to the tendency of individuals to construct a coherent and logical story or explanation for events or phenomena, even when the evidence does not support this explanation. This behavior can lead to a number of biases and errors in decision-making, as individuals may focus on information that supports their narrative and overlook information that contradicts it. The narrative fallacy can also lead to a distorted view of the world, as individuals may interpret events in a way that conforms to their preconceived beliefs and expectations. This behavior can be difficult to overcome, as it is often driven by psychological factors such as a desire for coherence and a need for meaning.
Narrative Fallacy (2024)
Table of Contents
Related Behavioral Science Terms
Belief Perseverance
Crystallized Intelligence
Extraneous Variable
Representative Sample
Factor Analysis
Egocentrism
Stimulus Generalization
Reciprocal Determinism
Divergent Thinking
Convergent Thinking
Social Environment
Decision Making
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References
References
- https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6436746/
- https://analystprep.com/cfa-level-1-exam/equity/behavioral-finance/
- https://www.thebehavioralscientist.com/glossary/narrative-fallacy
- https://www.investopedia.com/articles/investing/022015/how-cognitive-bias-affects-your-business.asp
- https://analystprep.com/study-notes/actuarial-exams/soa/ifm-investment-and-financial-markets/market-efficiency-and-behavioral-finance/
- https://wealthdesk.in/blog/behavioural-biases/
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