What is a cognitive bias?
As per a popular website, A cognitive bias is a systematic error in thinking that affects the decisions and judgments that people make. Some of these biases are related to memory.
The way you remember an event may be biased for a number of reasons and that in turn can lead to biased thinking and decision-making.
Other cognitive biases might be related to problems with attention. Since attention is a limited resource, people have to be selective about what they pay attention to in the world around them. Because of this, subtle biases can creep in and influence the way you see and think about the world.
The 11 biases that affect our decision making are as under:
Anchoring Bias – over-reliance on the first piece of information available. There’s a popular saying about negotiations stating, “The first one to speak, loses”.
Availability Heuristic – we tend to overestimate the importance of information available to us. For instance, a person might argue that eating fast food all the time is not unhealthy because he knew an athlete who did it all the time.
Choice Supportive Bias – tendency to choose something one feels positive about despite knowing that the choice has flaws. Think of a smoker taking smoke breaks thinking it releases stress temporarily knowing well that the long-term consequences are adverse.
Confirmation Bias – only listening to information that confirms our preconception. This does not let us accept an alternative point of view about things we would already be having strong preconceptions about.
Information Bias – tendency to seek information when it does not affect action. Once can often make more accurate predictions based on the information available at hand. More is Less, less is more.
Outcome Bias – judging a decision based on the outcome rather than how exactly was the decision made in that moment. For example – winning a great amount of money at a Poker game doesn’t mean gambling is a great idea to begin with.
Conservatism Bias – people favouring prior evidence over new information or evidence that has emerged which is why challenging the status quo or bringing change gets difficult a lot of times.
Recency Bias – The tendency to weigh the latest piece of information more heavily than older data which makes investors behave irrationally and believe that markets would look the way in the future they are today.
Survivorship Bias – This has been best explained by Mr. Anand Mahindra himself in this tweet below:
And the final one –
Blind Spot Bias – failing to recognize our own cognitive bias is the biggest bias in itself. People often tend to notice cognitive and motivational biases in others more than they can look in themselves.
This post was inspired by a beautiful infographic published by Business Insider. The same can be downloaded here.
I generally do not recommend books unless I’ve personally read them but ever since I put this post up almost every second reader of this post has written to me asking to read ‘Thinking Fast & Slow‘.
I am presently reading The 4-hour work week. Thinking Fast & Slow shall be taken up after I complete this.
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So what bias do you think is interfering in your decision making? Let me know in the comments section.