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Cognitive Bias: How Your Mind Plays Tricks on You and How to Overcome That
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Cognitive biases
...are common thinking errors that harm our rational decision-making.
We don't always see things as they are. We don't simply glean information through the senses and act on it; instead, our minds give that info their own spin, which can sometimes be deceptive.
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Optimism Bias
Is our tendency to overestimate the odds of our own success compared to other people's.
Overly optimistic predictions can be dangerous, leading us to waste time and resources pursuing unrealistic goals. In the real world of business, things don't always work out for the best, and it serves us well to know when conditions are not on our side.
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How to control the optimism bias
- Be skeptical of your own rosy expectations for your work.
- Assume projects will be more difficult and more expensive than you initially think they will.
- Don't trust your good ideas to manifest through positive thinking - be ready to fight for them.
- Trust the numbers. Numbers are firm but fair, and getting intimate with your business's cash flow can help you make more rational decisions.
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Negativity Bias
Is the tendency to change our thought processes and behaviors more because of negative things than we do because of neutral or positive things.
How to control it: Track your wins: record objectives attained, new ideas realized, and positive effects your work has had on the lives of others.
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Confirmation Bias
Is the tendency to focus on new information that confirms pre-existing beliefs and trivialize anything that might challenge those beliefs.
How to control it: Seek out information that goes against your pre-existing beliefs.
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Sunk Cost Fallacy
It describes our tendency to commit to something just because we've already invested resources in it—even if it would be better to give up on it.
How to control it: Always reevaluate your processes in light of new evidence.
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Anchoring Effect
Is the tendency to privilege the first information we encounter, even when subsequent information turns out to be more relevant or realistic.
How to control it: Because the anchoring effect can give you blinders for specific metrics, be sure that you're always reviewing data from new angles.
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The IKEA Effect
Is why we get attached to things when we had a hand in creating them.
It echoes the sunk cost fallacy: We're not prioritizing the object/project as much as we are the resources we've put into it.
The IKEA effect is easy to put to good use at work. You can do it for yourself by getting deeper in the weeds of the project you're a part of.
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Goal Gradient Effect
It explains why we work harder to achieve our goals when they're most closely in sight: At work, you might notice that you and your coworkers sprint toward a project's finish line once you can see the light at the end of the tunnel.
How to control it: Visualize your work in ways that allow you to see how far you have to go.
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Cognitive Miser Theory
We are apt to minimize cognitive effort and save our strength for when it's most needed. If we're not consciously engaged with the details, we're likely to take any shortcut that presents itself.
How to control it: Mindful and deliberate choices about how we apply our mental effort can help us establish patterns that eliminate friction and emphasize our strengths.
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SIMILAR ARTICLES & IDEAS:
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The Way We Delude Ourselves
Cognitive Biases are a collection of faulty and illogical ways of thinking which are hardwired in the brain, most of which we aren’t aware of.
The idea of cognitive biases was invented ...
Hyperbolic Discounting
It's a tendency to heavily weigh the moment which is closer to the present, as compared to something in the near or distant future.
Example: If you are offered a choice of $150 right now or $180 after 30 days, you would be more inclined to choose the money you are offered right now. However, if we take the present moment out of the equation, and put this offer in the distant future, where you are offered $150 in 12 months or $180 in 13 months, your choice is likely to be the latter one.
Common Biases
- Actor-Observer Bias: the way the explanation of other people’s behaviour tends to focus on the influence of their personality while being less focused on the situation while being just the opposite while explaining one’s own behaviour.
- Zeigarnik Effect: when something unfinished and incomplete tends to linger in the mind and memory.
- The IKEA Effect: when our own assembling of an object is placed at a higher value than the other objects.
- Optimism Bias: makes us underestimate the cost and duration for every project we try to undertake or plan.
- Availability Bias: makes us believe whatever is more easily available to our consciousness, and is more vivid (or entrenched) in our memory.
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Confirmation bias
People don't like to rethink their beliefs once they are formed.
We would rather ignore information that would challenge our ideas than engage with threatening new information. This is ...
Availability heuristic
Our brain likes to take shortcuts to solve a problem when normal methods are too slow to find a solution.
The problem with this approach is that frightening events are easier to recall than every-day events. We should be aware that alarmist news broadcasts don't help in an accurate sense of events.
Anchoring
We have a tendency to stubbornly hold on to a number once we hear it and gauge all other numbers based on the initial number, even if the information is not that relevant.
For example, if customers are limited to 'four per customer' they are more likely to buy four, even if they did not initially intend to do so.
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Decision-making errors
Most decision-making errors boil down to:
- logical fallacies (over-generalizations, comparing apples and oranges, circular thinking)
- limiting beliefs (underes...
Confirmation Bias
If you already have an opinion about something before you've even tried to figure it out, chances are you'll over-value information that confirms that opinion.
Think about what kinds of information you would expect to find to support alternative outcomes.
Attribution Bias
The “fundamental attribution error,” is when we excuse our own mistakes but blame other people for theirs.
Give other people the chance to explain themselves before judging their behavior.