What Is Egocentric Bias In Behavioral Economics?

Egocentric bias is a phenomenon in which people have a tendency to view the world from their own perspective and to overestimate the importance of their own thoughts and experiences. This bias can lead people to make judgments and decisions that are based on their own subjective experiences, rather than on objective evidence or the experiences of others. For example, if you are trying to decide whether to go to a particular restaurant, you may be more influenced by your own past experiences at that restaurant than by the opinions of others. Egocentric bias can be a source of errors in judgment and decision-making, as it can cause people to overlook important information and to make decisions that are not in their best interest. To avoid egocentric bias, it is important to consider the perspectives of others and to base decisions on objective evidence rather than on personal experience.

Related Behavioral Economics Terms