Economics Cognitive Biases Questions
The illusion of transparency refers to the tendency of individuals to overestimate the extent to which their thoughts, feelings, and intentions are apparent to others. In the context of economic choices, this bias can lead individuals to mistakenly believe that others can easily understand their preferences, motivations, and decision-making processes. As a result, individuals may make economic choices based on the assumption that others have a clear understanding of their intentions, leading to suboptimal outcomes. This bias can also affect negotiations, as individuals may fail to effectively communicate their needs and preferences, assuming that others can accurately perceive them. Overall, the illusion of transparency can hinder effective decision-making and lead to inefficient economic outcomes.