We need to be aware of our cognitive biases to be able to make better decisions and solve problems effectively. Human biases are a weakness in our thinking. We look at four main types of bias in this article.
To see how biases influence our thinking, we recommend looking at:
Cognitive bias (also referred to as cognitive illusions) are barriers to decision-making. They are the assumptions we make when we look at the world, and the things we need to make sense of to take action and make decisions.
Our thinking tends naturally to the irrational (based on assumptions not supported by evidence); however, by engaging with the slow mode of thinking, we can rectify for rational decision making.
We are all individually unique, and will tend for diferent types of bias:
Take a look at this example – there is no trick!
A bat and a ball together cost $1.10
The bat costs one dollar more than the ball
how much does the ball cost?
Decide on the answer before you click on the button.
The human mind is not capable of dealing with complexity or a large number of variables and relationships in the real world.
The brain’s default is to use rules of thumb (read more on heuristics). These are useful in non-complex situations but are the source of our type of bias.
Because our brain operates 95% of the time in the fast mode, we use intuition most of the time - that is our default, and this leads us to make poor decisions and errors in our thinking.
Human cognition is prone to a biased interpretation of reality. People tend to believe that they are better than others and will be subject to a particular type of bias.
Although people are capable of impressive acts of analysis, they are heavily prone to biases due to their intuitions, preconceptions and prior beliefs in a way that leads to logical failure.
There are many types of biases; we will look at the main four and add links to more:
These biases, and systematic errors in our thinking, prevent us from being entirely rational, and by 'rational', we are referring to deliberate thought associated with the slow thinking mode.
This bias occurs when we seek evidence that confirms our previously held beliefs while ignoring or downplaying the impact of evidence in support of alternative conclusions. We tend to support the conclusion of an argument based on the conclusion's believability, rather than its validity.
For example, the basis for the 2003 Iraq war was that Iraq possessed weapons of mass destruction. It was only made public in 2005 that Iraq possessed no such arsenal or the capacity to make them. Meanwhile, around 600,000 people had died.
Anchoring bias is when we rely heavily on a starting (or anchor) single piece of information, specific value or experience to make subsequent judgments. With an anchor established, other decisions become adjusted relative to that anchor. This process will inhibit our ability to interpret new, relevant, and realistic information accurately.
Whenever we have to guess something, for example, the population of China, the length of the Amazon river, the number of power plants in France etc. - we use anchoring. We start with something we know (an obvious valid reference point) and then estimate the answer from there.
In real estate, the asking price becomes the anchor; it primes the buyer to a figure. The buyer then adjusts the amount from that original figure.
This behaviour can even happen with irrelevant and unconnected relationships. For example, people in the street were asked to estimate the price of a bottle of champagne. Before that, they were required to pick a ping pong ball from one of two bags.
Bag A had all the balls with the number 10 written on it and bag B had the number 65. Then they were asked how much does the bottle of champagne cost? Those that picked from bag A said 0, and those that picked from bag B said 5. The relationship is irrelevant. What happened was that the ping pong ball primed them to a number and acted as an anchor.
During routine decision making individuals anchor, or overly rely, on specific information or particular value, and then adjust to that value to account for other elements of the circumstance.
Usually, once the anchor becomes set, there is a bias toward that value.
This bias is our overall impression of a person, company, brand or product. It influences our feelings and thoughts about that entity’s overall character or properties. It is the perception, for example, that if someone does well in a specific area, then they will automatically perform well at something else, regardless of whether those tasks are related.
This attitude affects how we treat and act with a person, company or situation. It is a useful heuristic. We cannot do an in-depth analysis of every single decision, but it is also dangerous if we are not careful. We can make seriously poor judgements.
For example, good-looking people will get a lighter sentence than less-attractive people, even if they commit the same crime. Even judges need to be mindful of the halo bias!
This bias occurs when a person overestimates the reliability of their judgments. For example, the certainty one feels in her/his ability, performance, level of control, or chance of success. It is a very prevalent bias.
Overconfidence was the cause of the sinking of the Titanic, the nuclear accident at Chernobyl, the loss of Space Shuttles Challenger and Columbia, the subprime mortgage crisis of 2008, and the Deepwater Horizon oil spill in the Gulf of Mexico.
Overconfidence has a compounding effect – it amplifies the other decision-making biases.
Consider the size of the two circles in the centre. Which one is the largest?
The factor that we need to be aware of is the illusion of skill and expertise – the brain believes that it makes sound judgements, but in reality, it is unaware that it is blind to its blind spots. People do not know the limits of their expertise – people do not know what they do not know. Once they feel confident, this attitude spills over to general decision-making, and they feel the same confidence.
The problem is that we form judgements very quickly, and we tend to confirm them just as quickly. It would be best if you looked at things independently – reserve judgment - then and only then can you form an opinion. The disciplined process of analysis and scrutiny will inform your decision.
This process is a big deal – it needs to be stressed – the process forces you to look at the various aspects of the problem independently of each other. Once you have considered all the elements, then and only then, can you make your decision, and it will be a considered and balanced decision.
You cannot form an opinion from a global impression (this is what happens with expert illusion) – you never actually consider the details. It would be best if you went from the bottom up – details should inform your global impression. Intuition needs to be delayed by going through a process of detailed analysis.
Further reading:
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