Unit 2 · Level 1 · Cognitive biases
Confirmation bias: the echo chamber
Once you own something, your brain becomes its PR department. You hunt bullish takes, skim past warnings, and the algorithm, noticing what you linger on, serves you more of the same. That's confirmation bias plus an echo chamber. A feed that agrees with you is not evidence; it's a mirror.
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What you get asked
You hold TokenX and your research consists of searching 'why TokenX will 10x'. The problem?
The internet contains arguments for everything. A question phrased to confirm will confirm. That's a search result, not a finding.
Order the disconfirmation drill
Scientists try to break their own hypotheses; that's the whole method. Investors who do the same lose less to their own PR department.
The strongest test of an investment thesis is hunting for ___ evidence.
Supporting evidence is easy and infinite. One solid piece of disconfirming evidence is worth a hundred bullish threads.
Your entire feed agrees your favourite coin is going up. The most accurate reading?
Feeds are personalised. Unanimous agreement usually measures your clicking history, not the market. And when everyone IS bullish, ask Unit 1's question: who's left to buy?
The professional habit that fights confirmation bias:
If you can't argue the other side well enough to feel it, you don't hold a view; a view holds you. 🐜
The rest of this unit
Loss aversion, echo chambers, anchors, hubris: the bugs in everyone's mental firmware.