It refers to the mental conflict that occurs when a person's behaviors and beliefs do not align. It may also happen when a person holds two beliefs that contradict one another. Cognitive dissonance causes feelings of unease and tension, and people attempt to relieve this discomfort in different ways.

What happens when cognitive dissonance occurs?

Cognitive dissonance occurs when a person believes in two contradictory things at the same time. Within investing and in other areas, failing to resolve it can lead to irrational decision-making.

What are examples of cognitive dissonance?

This produces a feeling of mental discomfort leading to an alteration in one of the attitudes, beliefs or behaviors to reduce the discomfort and restore balance. For example, when people smoke (behavior) and they know that smoking causes cancer (cognition), they are in a state of cognitive dissonance.