149. Familiarity Bias: Why the Devil You Know Feels Safer Than the Devil You Don’t, a Behavioral Economics Foundations Episode

<p><span style="font-weight: 400;">Today we will be talking all about familiarity bias. Sometimes on the show, I share concepts with you that are a bit foreign. Like one of my all-time favorites in hyperbolic time discounting or even something like “choice architecture” which can sound a little intimidating. Others are like the topic of today’s show. Familiarity bias is less scary because...it’s familiar!</span></p> <p><span style="font-weight: 400;">It’s a term that is a bit like a warm hug, but that doesn’t mean there aren’t things for you to learn. This is a bias that can serve you well in life and business but it also often steers people wrong. So it is important to know how it works, and what to be on the lookout for on both the positive and negative sides.</span></p> <h3><span style="font-weight: 400;">Show Notes:</span></h3> <ul> <li><span style="font-weight: 400;">[00:07] Today’s behavioral economics foundations episode is about familiarity bias.</span></li> <li><span style="font-weight: 400;">[02:30] The subconscious brain makes decisions using rules of thumb based on predictability. It likes to know what is coming next so it can keep the reins which means it has a strong bias toward things it is familiar with.</span></li> <li><span style="font-weight: 400;">[04:03] What matters is knowing that the more people become familiar with things, the more likely they are to prefer them; to have a bias toward them.</span></li> <li><span style="font-weight: 400;">[04:22] Studies have shown that our bias toward the familiar can make it so we make worse bets, that we invest in the wrong things, that we will be more likely to hold out in jobs that we have outgrown or keep pouring money into projects we should have let go of. </span></li> <li><span style="font-weight: 400;">[05:49] That new job opportunity or relationship or project or apartment or whatever else is presenting itself will probably be scary at first, but that doesn’t mean it is bad or wrong. Embrace the feeling and jump in knowing that soon it will be l