Cognitive Biases that affect Decision Making

“I tried to get an appointment with my client for six months, I could not succeed”, said Shashi, my friend in an Omani Company. “However the moment my Scottish counterpart sitting in the next cabin called him, he got an appointment the next day”.

Two Caucasian ladies, one French and the other a Polish, sang an average composition on peace & harmony in Bangalore for 2-3 minutes. After their recital, there were hordes of people from the audience who wanted to get photographs along with them. The singers were neither celebrities nor accomplished singers, but the colour of their skin made all the difference! Let us look at the different types of perceptual biases most of us have.

  1. Blind-Spot bias-: Your own cognitive bias is a bias in itself. People notice cognitive and motivational biases much more in others than in themselves. We have a positive bias towards the Caucasians but may discount brown or dark-coloured skin executives.
  1. Anchoring bias: People are over-reliant on the first piece of information they hear. In a salary negotiation, whoever makes the first offer establishes a range of reasonable possibilities in each person’s mind
  1. Availability heuristic: People overestimate the importance of available information. A person might argue that smoking is now unhealthy because they know someone who chain smoked and still lived upto 100. Quite often the information is taken out of context or only a sample is selected by ignoring the other data.
  1. 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 group-think and is reason why meetings are often unproductive.
  1. 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.
  1. 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 of a roulette table after a string of reds.
  1. Confirmation bias: We tend to listen only to information that confirms our preconceptions – one of the many reasons it’s so hard to have an intelligent conversation about climate change.
  1. Conservation bias: Where people favour 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
  1. 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.
  1. 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

It is not possible to eliminate all the biases, but the least we can do is to be aware of them and in mindfulness the chances of our decisions going wrong can be minimized.

 

 

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