What Is The Narrative Fallacy In Behavioral Economics?

The narrative fallacy is a concept in behavioral economics that refers to the tendency of individuals to construct a coherent and logical story or explanation for events or phenomena, even when the evidence does not support this explanation. This behavior can lead to a number of biases and errors in decision-making, as individuals may focus on information that supports their narrative and overlook information that contradicts it. The narrative fallacy can also lead to a distorted view of the world, as individuals may interpret events in a way that conforms to their preconceived beliefs and expectations. This behavior can be difficult to overcome, as it is often driven by psychological factors such as a desire for coherence and a need for meaning.

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