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Homework answers / question archive / What parallels can be drawn between the notions of market failure and cognitive bias?
What parallels can be drawn between the notions of market failure and cognitive bias?
A cognitive bias refers to a mental issue in which the brain of a person is not able to make judgments and decisions properly. The parallel between market failure and cognitive bias can be drawn in the sense that both of them include allocation problem. Cognitive bias includes the allocation problem of energy cells to appropriate brain compartments and market failure includes allocation problem of the resources in the society.