Cognitive Biases: How Your Brain Affects What You Buy

Buy now or save for later? Many of us have asked ourselves this very question before completing a purchase. But, if we’re so capable of calculating the risks and rewards of buying, why do we still make purchases that we regret or blow our budgets?

Most savvy shoppers know that marketers prey on our impulses; that moment when emotions battle self-control. However, emerging studies show that what’s more threatening to our ability to make level-headed decisions is what we don’t understand: our own emotional and cognitive biases. [1]

What’s A Bias?

No, we’re not saying that you’re narrow-minded! Everybody has biases—they’re like opinions we hold subconsciously that affect the way we think and the decisions that we make.

Where do they come from? Biases are filters woven from our personal experiences and beliefs. Through them, we make judgments about people, opportunities, politics, and, of course, ourselves.

We evolved to view the world through biases for survival. They allowed our ancestors to make snap decisions during a time when tiny differences in reaction speed—a matter of a few hundred milliseconds—meant a difference between life and death. For example, the negativity bias causes us to give more weight to negative experiences than positive ones and run from anything that might mean danger before it’s too late.

In short, biases support our tendency to make systematic decisions in certain circumstances based on what we’ve learned or assumed from past experiences, rather than current evidence. [2]

How Biases Affect What You Buy

While biases allowed early humans to make sense of the world around them and were beneficial in the past, these days they can lead us to make big mistakes and are often detrimental to smart spending.

Understand that it’s impossible to be unbiased in our decision-making. However, you can alleviate the negative influence biases have on your purchasing habits by understanding how they come into play while you shop.

Which Cognitive (Mental) Biases Shape Your Shopping

Think of a cognitive bias as a rule of thumb that may or may not be factual. We’ve all seen movies where a thief wears a police uniform to pass through a security checkpoint. The real police officers assume that because the person is wearing a uniform like theirs, he must be a real police officer. That’s an example of cognitive bias.

What does a fake cop have to do with your spending habits? Cognitive biases influence you to make assumptions that aren’t necessarily true. Here are some examples:

The Biggie: Confirmation Bias

Remember when we mentioned that biases were woven from a lifetime of your personal experiences and beliefs? The thing is, those opinions aren’t actually based on years of objective analysis.

In reality, your opinions are nothing more than a collection of information that you chose to pay attention to.

That’s confirmation bias: when you only believe information that conforms to your prior beliefs and discount everything else—doing so is dangerous because the effects are compounding.

Confirmation bias colors your decisions in everything ranging from politics to science, but it's just as impactful on your shopping choices. Take most "alternative" treatments for a cold, like Vitamin C and zinc, for example. They aren't as well proven as basic home remedies. Yet, people still believe they work so strongly because they've been told as much for most of their lives. You end up wasting money on something with no proven benefit because you're unwilling to believe any evidence to the contrary.

Read More: Is There a Bullseye On Your Back? How Confirmation Bias Makes You a Target for Scams

How to counteract confirmation bias? Keep an open mind when shopping around, instead of just going with whichever product, brand, or solution you’ve always thought of as best. Additionally, research through a variety of sources, such as HighYa. If the data tells you that you're wrong? Accept it and find another product.

The Decoy Effect Makes You Think You’re Getting A Bargain

Essentially a marketing trick, the decoy effect kicks into play when we change our preference for a product after viewing a more expensive product that’s been placed right next to it. In his book Predictably Irrational: The Hidden Forces That Shape Our Decisions, author Dan Ariely shares this example:

“When Williams-Sonoma first introduced a home ‘bread bakery’ machine (for $275), most consumers were not interested...Flustered by the poor sales, the manufacturer of the bread machine brought in a marketing research firm, which suggested a fix: introduce an additional model of the bread maker, one that was not only larger but priced 50 percent higher than the initial machine...Sales began to rise, though it was not the large bread maker that was being sold...people didn't have to make their decision in a vacuum. They could say: ‘Well, I don't know much about bread makers, but I do know that if I were to buy one, I'd rather have the smaller one for less money.’

How to counteract the decoy effect? Again, a little bit of research on a product can provide you with the information needed to not just settle for second best. 

Everything’s Relative: The Anchoring Effect 

A classic example of the anchoring effect is our tendency to purchase items that are on sale; we’re more likely to see (and value) the difference in price, but not the overall price, itself.

This is why some restaurant menus feature very expensive entrees, while also including more (apparently) reasonably priced ones. It's also why, when given a choice, we tend to pick the middle option—not too expensive, and not too cheap.

Another example of the anchoring effect is how it sets our estimation of value for an entire category of products. For example, if you learn that Apple sells their newest generation of iPhones for $699, then you may believe that’s a fair price for all of this year’s new phone models—distrusting cheaper options. In fact, we usually have no idea what a product is worth, and the first company that throws out a number sets the standard for everything else.

The Atlantic shares another example of how anchoring can affect your idea of relative cost across products:

“You walk into a high-end store, let's say it's Hermès, and you see a $7,000 bag. ‘Haha, that's so stupid!’ you tell your friend. ‘Seven grand for a bag!’ Then you spot an awesome watch for $367. Compared to a Timex, that’s wildly over-expensive. But compared to the $7,000 price tag you just put to memory, it’s a steal. In this way, stores can massage or ‘anchor’ your expectations for spending.”

How to counteract the anchoring effect? Unfortunately, anchoring is really hard to avoid, even when you know you're doing it. Like most of these biases, the best thing you can do is acknowledge it exists and challenge your thought process as often as possible. 

Another tip is to be sure to take into account how much an item is worth to you.

I’m particularly persuaded by the anchoring effect when it comes to shopping sales from my favorite clothing brands and have been known to purchase 50%-off cocktail dresses midway through a year of traveling. This is much to the chagrin of my significant other who has always been stringent with his number of belongings and is sometimes forced to carry my spillover.

Don’t get me wrong, there wouldn’t be any resistance if I actually wore my collection of sequined and spangled items. But instead, they continue to languish unworn, decorating closets and the interior of our bags along with other off-season items.

Clothe in the closetGuess which of these items are rarely worn?

To conquer my habit of collecting impractical wear, I’ve started to calculate cost-per-wear on pieces I already own to help me get an idea of how useful a new garment might be.

For example, if I spend $200 on a great pair of all-purpose boots, and wear them at least half the year, they’ll end up costing me just over a dollar a wear. Alternatively, those gorgeous black pumps that I had to buy because they were on sale for $60? I wore them once, and let me tell you that the learning cobblestone streets filled with potholes void any enjoyment I could have gotten from those pretty pumps was not worth $60.

Reason vs. Emotion

Anyone who’s made an emotional purchase understands that cognitive biases aren’t the only influence on whether or not you whip out your credit card. Even if you’re aware of how to beat the above biases, understanding the effect of emotion helps to establish your shopping self-control:

  • Understand that the more you have on your mind, the less self-control you have: This is something marketers are well-aware of: distracted people are more likely to spend money. Most shops are filled with shiny, complicated distractions, such as bright colors, music, and incredible offers—all designed to confuse us and open our wallets.
  • Know that your supply of self-control is limited: Studies show that our self-control is actually sapped each time we use it. [1] It’s also sapped, predictably, by alcohol, lack of sleep and stress.
  • Don’t spend when you’re sad: Feeling sad may well increase the chance we want to spend—one study found that those who are sad are more likely to want to sell at a lower price and buy at a higher price. [3]

How To Stop Biases From Getting The Best Of Your Spending

The most interesting thing about our biases is the fact they all work together to sabotage our spending and decision-making skills. Our denial makes the struggle even more difficult, as we’re prone to believing that we don't have these biases to begin with.

However, that makes the solution to bias-based spending quite simple: recognize you have these biases and keep them in mind when you're out shopping.

Additional steps you can take to control the influence of emotions and cognitive biases on your spending include:

  • Self-imposed limits: Research suggests that self-imposed limits can help to increase self-control. [4] As a bonus, telling other people about these limits will tend to increase our adherence to them.
  • Inact cooling-off periods: Take time to decide about a purchase, especially anything expensive. Not just a few minutes—more like a few hours or days.
  • Monitor your self-control: The fact that self-control seems to run-down with use suggests we need to monitor its levels. Have you used a lot of self-control recently? Are you tired? Are you about to snap? Again, it might be better to wait until your self-control tank is refilled.

Bottom line? The only way to minimize how your biases affect spending is to set objectives for each shopping trip or set of purchases. However, life and emotions get in the way and it’s okay to settle for the second best option: learn to make note of when biases or emotions get in the way and do your best not to allow the same feelings or thoughts to influence your shopping again.


  1. Baumeister, R. F. & Vohs, K. D. (2003). Willpower, Choice, and Self-control. In: G. F. Loewenstein, D. Read & R. F. Baumeister, (Eds). Time and Decision: Economic and Psychological Perspectives on Intertemporal Choice. New York: Russell Sage Foundation.
  2. Being Human: Bias
  3. Lerner, J. S., Small, D. A., & Loewenstein, G. (2004). Heart Strings and Purse Strings. Carryover Effects of Emotions on Economic Decisions. Psychological Science, 15(5), 337-341.
  4. Predictably Irrational by Dan Ariely (Book review)

Autumn Yates

Autumn draws from a reporting background and years of experience working remotely, while living abroad, to focus on topics in travel, beauty, and online safety.


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