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 economics, this cognitive bias can influence economic choices by leading individuals to believe that others can easily understand their preferences, motivations, and decision-making processes. As a result, individuals may make economic decisions based on the assumption that others have a clear understanding of their intentions, leading to potential misjudgments and suboptimal outcomes. This bias can impact various economic situations, such as negotiations, market transactions, and investment decisions.