Here are some common biases. Do you recognise any in yourself?

• We find it emotionally easier to accept a proposal than reject it. That's why we tend to believe the media and salesmen. Even of snake oil.

• We find it easier to follow the crowd.

• Discussions within closed groups (such as the regular group at the office) can be self-reinforcing. They can lead to agreement on propositions that are likely to be false.

• When viewing two independent events, we tend to assume causality. The Aztecs required human sacrifice to prevent the sky from falling on the earth. Hey, it had worked so far!

• We have probability blindness. We are 90% likely to go on holiday and 10% likely to cancel through family illness. We cannot imagine the composite event which is 90% of one and 10% of the other.

• We tend to ignore the small probability of large losses. In real life this is a virtue - otherwise we would never go outside for fear of death by lightning. In investment, the consequence may be precipice bonds.

• We give too much weight to recent evidence and not enough to the distant past.

• We easily confuse conditional and unconditional probabilities. See the Sally Clark cot-death case, 20 years ago but still salutary. The chance of Sally Clark, a young solicitor, having two children die natural cot-deaths was quoted by an 'expert' at her trial as 73 million to 1 against. The judge allowed the jury to interpret this as the odds of her being innocent. This was wrong. 73 million to 1 may be the odds of specifically Sally Clark having two cot deaths. But these are not the odds that, given a double cot death, the cause is not natural. Put another way: every few years one mother in the UK suffers a second cot death, by the terrible laws of chance. Are they therefore to be prosecuted for double murder? Having lost both her children Sally Clark went to prison for 3 years and died four years after release from acute alcohol poisoning.

• We are more likely to take risks to reverse a loss than to increase a profit. This is illogical - losses should make us less able to risk further losses.

• We don't like to face disappointment. That is why people like stop-losses. A better name would be 'hide-losses'.

Understanding these biases is important because:

• they can accidentally lead us astray

• they can be incorporated into investment products to intentionally lead us astray.