One assumption of mainstream economics is that errors are independent across individuals in the sense that the errors of one individual are not affected by or affect the errors of another individual. In the modern world, humans are faced with many decisions at the same time and with cognitive power being limited, heuristics are used to decide.
There is obviously no guarantee that these decisions will be optimal even though one could spend more energy to make the optimal decision. The halo effect 12. Very often in our lives we tend to appreciate one trait of another person so much that we overlook the other, sometimes, undesirable traits. This is because of what has come to be called the “halo effect”.