When we only pay attention to the exception above the normal, we end up misunderstanding reality. While there is much to learn from the anomalies, it would be a mistake to expect the same results from doing the same things.
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Survivorship bias is a logical error that twists our understanding of the world and leads to a wrong understanding of cause and effect.
We fall into survivorship bias when we assume that success stories tell the entire story of a product/business, while we don't properly consider past failures.
Survivorship bias leads us to think that coincidence is a correlation. We want the encouragement from survivorship bias so we can believe in our own capabilities, but it results in an inflated idea of how people become successful.
The fact is that success is never guaranteed. It does not mean that we shouldn't try, just that we should have a realistic understanding.
Statistics of market performance can be distorted when they focus on the rare successes while excluding companies which collapse.
Business books laud the rule-breakers who ignore conventional advice and still create profitable enterprises. However, many misfit billionaires succeed in spite of their unusual choices, not because of them.
Successful entrepreneurs teach us very little. We would do better by analyzing the causes of failure first and then the successes.
The huge failure rate for start-ups is often hidden. We will do well to recognize that these failures hold important information.
The only real similarity in unusual success stories is luck.
We can overcome survivorship bias by considering the things that started on the same path but didn't make it. Try and figure out why they failed. If you're going to do something, make sure you are fully informed.
We tend to be interested in the success stories of many. We love the encouragement it provides us, but we often overlook the fact that most of these success stories have undergone through many failures.
Survivorship bias is when we concentrate on the people and the things that passed through a selection process and experienced a form of success. This process tends to overlook those who did not make it through and almost always leads to false conclusions.
The decoy effect occurs when a person’s choice between 2 items changes when a third option, asymmetrically dominated, is introduced.
This third option is made easy to discard.
The decoy option is added to nudge the customers towards the intended target option, which is usually more than they really need. These subtle “nudges” are not meant to be manipulative and restrictive.
This is why it pays off to be the first one to offer a bolstering range instead of a firm number when negotiating your salary. The first offer will establish the possibilities in each person’s mind.