Humans have the capacity to think through problems carefully, but we’re also hardwired to make ‘intuitive’, automatic decisions. This is what psychology experts have labelled as system 1 and system 2 thinking. You may not be aware of it, but your intuition might prevent you from saving tens of thousands of dollars when you buy your next car.

As you perform complicated tasks such as driving or even simple tasks such as tying your shoes, you often rely on your intuition to automatically guide you through the process. Our intuition helps us simplify information and operate in modern society, but it can also lead us to make mistakes. Researchers have identified a long list of cognitive and emotional biases (think of them as mental shortcuts) that prevent people from making the best decisions. In this article, I’ll focus on how Present Bias and Loss Aversion Bias prevent car buyers from making the best financial decision when they choose between buying an electric or gas car.