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Mental shortcuts
We’re not nearly as rational as we like to believe. When we face an uncertain situation, we fail to evaluate the information or to look up relevant statistics carefully.
Instead, we depend on our mental shortcuts which may lead us to make rash decisions.
MORE IDEAS FROM THE ARTICLE
We often assume that intelligence guards against bias. Its why those with higher S.A.T. scores think they are less likely to make universal thinking mistakes.
However, smarter people are more vulnerable to these thinking errors.
- People who are aware of their own biases are not better able to overcome them. Our intuitive thinking is just as prone to overconfidence, extreme predictions, and the planning fallacy.
- According to scientists, intelligent people have a larger bias blind spot. They can spot systematic flaws in others, but not in themselves. They will excuse their own minds but harshly judge the minds of other people.
When we assess ourselves for biases, we tend to engage in elaborate introspection. The problem with the introspection approach is that the driving forces behind biases remain largely invisible to self-analysis and t is also impermeable to intelligence.
RELATED IDEAS
- System 1 and System 2: Use fast thinking for routine decisions and slow thinking for important decisions.
- Bayesian Thinking: Continuously update the confidence in your beliefs as you come across new information.
- First Principles Thinking: If you face a difficult problem, break it down and reassemble it from the ground up.
- Occam’s Razor: When there are many possible explanations, assume that the simplest one is probably correct.
- Hanlon’s Razor: If someone mistreats you, assume that they probably did it out of neglect rather than malice.
- Groups are better equipped than individuals to recognize an answer as correct. But, when the whole group is susceptible to similar biases, groups are inferior to individuals.
- Polarization can occur in groups. One major bias in risky decision making is optimism, while doubts are suppressed. If an individual in a group is thinking differently to the group, it is easy to understand how they would suppress themselves.
- However, in groups of competing individuals, such as the corporate investment committee, the different dynamics can lead to better decision-making.
- In an internal marketplace where groups come to a consensus about the risks and rewards associated with their decisions, internal incentives can shape how the group perceives risks and rewards that are different from the reality of the risks and rewards in the external marketplace. The incentives can distort risk perception.
- Don’t compare options side by side: In comparison mode, we end up spending too much time playing “spot the difference.” Instead, evaluate each choice individually and on their own merit.
- Know your “Must-Haves” before you look for something to buy: that way, you won't get suckered into features you don’t really need.
- Optimize for things you can’t get used to: your happiness will adjust back to anything that is stable and certain like your income, the size of your house, or the quality of your TV.