Economics Cognitive Biases Questions
The halo effect refers to a cognitive bias where individuals tend to make judgments or evaluations about a person, product, or company based on their overall impression or a single positive trait. This bias can influence economic behavior as it may lead individuals to overestimate the overall quality or value of a product or company based on a positive attribute, such as a well-known brand name or a charismatic leader. As a result, individuals may be more willing to pay higher prices or make purchasing decisions based on this biased perception, which can impact market demand and pricing strategies.