Psychology Terminology

  • Decoy Effect

    n marketing, the decoy effect is the phenomenon whereby consumers will tend to have a specific change in preference between two options when also presented with a third option that is asymmetrically dominated.

  • Loss Aversion

    Refers to the psychological idea that people feel more negatively about losing money than they do about the prospect of getting money.

  • Net Promoter Score (NPS)

    A customer satisfaction metric that measures, on a scale of 0-10, the degree to which people would recommend your company to others. The NPS is derived from a simple survey designed to help you determine how loyal your customers are to your business. To calculate NPS, subtract the percentage of customers who would not recommend you (detractors, or 0-6) from the percent of customers who would (promoters, or 9-10). Regularly determining your company’s NPS allows you to identify ways to improve your products and services so you can increase the loyalty of your customers.

  • Survivorship Bias

    Survivorship bias or survival bias is the logical error of concentrating on the people or things that made it past some selection process and overlooking those that did not, typically because of their lack of visibility. This can lead to false conclusions in several different ways. It is a form of selection bias.