The situation describes overcoming functional fixedness. This cognitive bias occurs when someone cannot think of a new approach to a problem because they are too focused on the traditional uses of the objects involved.
In this case, the person lost an earring and needed a temporary back. Instead of getting a proper earring back, they used thermocol (styrofoam). This is overcoming functional fixedness because thermocol is typically used for packaging or insulation, not as an earring accessory. The individual creatively repurposed the material, thinking beyond its usual function to solve their immediate problem.
Therefore, using thermocol creatively demonstrates overcoming the limitation of seeing objects only in their conventional roles, which is the definition of functional fixedness.