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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...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.
- 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.
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.
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.
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.
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.
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.
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.
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.
RELATED IDEAS
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 called "confirmation bias".
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 in the 1970s by two social scientists Amos Tversky and Daniel Kahneman, with Kahneman winning the 2002 Nobel Prize in Economics for the same.
Status quo bias is when we prefer that our environment and situation should remain unchanged.
The bias has the most impact in the area of decision-making, as we tend to prefer the more familiar choice over the less familiar, but often better, option.