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Cognitive Biases

Cognitive Bias

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 This article was excerpted from Business Insider, “20 COGNITIVE BIASES THAT SCREW UP YOUR DECISIONS”

Cognitive Biases exist for a reason. They serve as “shortcuts” for our brains to conserve energy. The fewer decisions one consciously makes the less brainpower is needed. Our brains have learned from past experiences and expect consistent outcomes. However, those conclusions do not always apply to future decisions. These bias can cloud judgement and even lead to making poor decisions. Systemic problems are often rooted in a collective bias because they are learned at a very young and formidable age. Be aware of these cognitive biases the next time you make a decision. Practice mindfulness and catch the bias before it is too late.

1. Anchoring Bias

People are over-reliant on what they hear first. When interviewing candidates, the first candidate interviewed is often remembered. It is common to be partial to the first choice whether they are the most qualified or not. Keep copious notes on each and every candidate for reference, rather than keeping it all in your head. Putting the facts and initial opinions on paper (or device) removes the cognitive bias.

2. Availability Heuristic

People overestimate the importance of readily available information. A person might argue that smoking is not unhealthy because they know someone who lived to 100 and smoked three packs a day. That person is just an outlier! Research multiple diverse sources and follow statistics.

3. Bandwagon Effect

The probability of one person adopting a belief increases based on the number of people who hold that belief. This is a powerful form of groupthink and is reason why meetings are often unproductive. Have meeting participants review briefs and propose opinions independently before meetings.

4. Blind-Spot Bias

Failing to recognize your own cognitive biases is a bias in itself. People notice cognitive and motivational biases much more in others than in themselves. This is an influence to strengthen with mindfulness and a growth mindset. Look in the mirror and assess how you would advise someone else in your shoes.

5. Choice-Supportive Bias

When you choose something, you tend to feel positive about it, even if that choice has flaws. Like how you think your dog is awesome – even if it bites people every once in a while. Leaders leave their egos out the door and honestly assess a decision based on facts. Be open to the advice of others.

6. Clustering Illusion

This is the tendency to see patterns in random events. It is key to various gambling fallacies, like the idea that red is more or less likely to turn up on a roulette table after a string of reds. Reminder yourself that these are independents events and your luck can make a turn at any time!

7. Confirmation Bias

We tend to listen only to information that confirms our preconceptions regardless if it is based on facts– one of the many reasons it’s so hard to have an intelligent conversation about climate change. Now that news is catered to you and your “online” history we tend to be exposed to one side of an opinion. Switch the channel and listen to what the other “tribe” is saying. With conscious effort to uncomfortably listen to something that will challenge your preconceptions, you will jolt this bias!

8. Conservatism Bias

Where people favor prior evidence over new evidence or information that has emerged. People were slow to accept that the Earth was round because they maintained their earlier understanding that the planet was flat. When new facts emerge, face the facts and cut your losses. Don’t be one of the last flat-earthers huffing and puffing in the corner.

9. Information Bias

The tendency to seek information when it does not affect action. More information is not always better. With less information, people can often make more accurate predictions. Going down a rabbit-hole isn’t effective and can get in the way of the best decision. Just because there is a fork-in-the-road, that doesn’t warrant an exploration. Stay on track.

10. Ostrich Effect

The decision to ignore dangerous or negative information by “burying” one’s head in the sand, like an ostrich. Research suggests that investors check the value of their holdings significantly less often during bad markets. You could be neglecting useful information and kicking yourself later. It might be stressful, but processing the bad news now is better than later.

11. Outcome Bias

Judging a decision based on the outcome – rather than how exactly the decision was made in the moment. Just because you won a lot in Vegas doesn’t mean gambling your money was a smart decision. Risk is when the outcome can be positive or negative. Just because gambling went well doesn’t mean there was no risk. Assess a risky endeavor by considering all possible outcomes, the degree of risk, and your risk tolerance. Maybe the outcome isn’t worth the risk after all?

12. Overconfidence

Some of us are too confident about our abilities, and this causes us to take greater risks in our daily lives. Experts are more prone to this bias than laypeople, since they are more convinced that they are right. Keep yourself in check and open to reality. Have strong opinions loosely held.

13. Placebo Effect

When simply believing that something will have a certain effect on you causes it to have that effect. In medicine, people given fake pills often experience the same physiological effects as people given the real thing. Have a measurement system and look at the facts before jumping to conclusions.

14. Pre-Innovation Bias

When a proponent of an innovation tends to overvalue its usefulness and undervalue its limitations. Sound familiar, Silicon Valley? While innovations are exciting, they have bugs and inconsistencies. Have a skeptical eye and do your research before taking action.

15. Recency

The tendency to weigh the latest information more heavily than older data. Investors often think the market will always look the way it looks today and make unwise decisions. When exposed to many options, it is common to think fondly on the latest choice. Give every choice respect and honest assessment (key is to write down notes!) to make the best choice.

16. Salience

Our tendency to focus on the most easily recognizable features of a person or concept. When you think about dying, you might worry about being mauled by a lion, as opposed to what is statistically more likely, like dying in a car accident. Focus on the statistics and facts when making judgements.

17. Selective Perception

Allowing our expectations to influence how we perceive the world. An experiment involving a football game between students from two universities showed that one team saw the opposing team commit more infractions. Look at the choices with a sober eye and assess based on what is actually happening (rather than what you expect to happen).

18. Stereotyping

Expecting a group or person to have certain qualities without having real information about the person. It allows us to quickly identify strangers as friends or enemies, but people tend to overuse and abuse it. Unfortunately, common areas of discrimination are race, gender, sex, ethnicity, and nationality. One person has nothing to do with the other. There are literally laws to stop us from stereotyping. A tip is to remove names from resumes since names can often shed light on a person’s qualities.

19. Survivorship Bias

An error that comes from focusing only on surviving examples, causing us to misjudge a situation. For instance, we might think that being an entrepreneur is easy because we haven’t heard of all those who failed. Or that becoming an actor is a reasonable career choice since we focus on movie stars and their names in bright lights (not on the waiter who is a wannabee actor). Look at the chances of success.

20. Zero-Risk Bias

Sociologists have found that we love certainty – even if it’s counterproductive. Eliminating risk entirely means there is no chance of harm being caused. By being risk averse, we would miss out on favorable outcomes that still have a possibility of happening. Being prepared and hedging makes taking on risk an easier pill to swallow.

Disclaimer: This article is for general informational purposes only and is not intended to be and should not be taken as professional medical, psychological, legal, investment, financial, accounting, or tax advice. Arootah does not warrant or guarantee the accuracy, reliability, completeness, or suitability of its content for a particular purpose. Please do not act or refrain from acting based on anything you read in our newsletter, blog or anywhere else on our website.

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4 years ago

Wow this really opens up my eyes