Kosher Money How Money Plays Tricks on Your Mind (Feat. Naftali Horowitz)
Aug 30, 2023
Naftali Horowitz, a rabbi and behavioral finance educator, explains how our minds mislead us about money. He unpacks cognitive shortcuts, representation bias and base rates, mental accounting, regret aversion, anchoring and retail tricks. Short, vivid stories and tests reveal why smart people still make irrational financial choices.
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Bargain Framing Drives Purchases
- A store marked an item from $12.99 to $4.99 and it flew off the shelf.
- The identical item marked from $1.99 to $4.99 did not sell, showing discount framing wins.
Remember: All Money Is Equal
- Treat all dollars as equal and avoid mental accounting traps.
- Evaluate purchases by net effect on wealth, not by which "bucket" the money came from.
Percentages Beat Absolute Dollars In Our Minds
- Mental accounting makes people chase small percentage savings on trivial items and ignore equal absolute savings on big tickets.
- Buyers value relative percentages over absolute dollars.
