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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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.

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.

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 tend to put the least amount of effort possible into problem-solving. 

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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RELATED IDEAS

We are more likely to listen to success stories than failures. The result is that we often over-estimate the likelihood of success in risky ventures.

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IDEAS

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.

  • When offered several sandwich options, individuals often choose a sandwich they have eaten before.
  • In 1985, Coca Cola reformulated the original Coke flavor and started selling a "New Coke." Although blind taste tests found many consumers preferred New Coke, consumers continued to buy Coke Classic. New Coke was discontinued in 1992.
  • In political elections, the current candidate is more likely to win than the challenger.

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