Imagine you are hiring someone, and this person's profile is a good fit for the role, yet you have an underlying feeling that they might not be able to do well at this job.
You have no data to prove that they might not succeed at this job; you only have an intuition. So you end up not hiring this person.
In this situation, are you being objective and rational? The answer is a clear no. You went with your intuition formed by biases rather than data which is objective.
Often, you don't realize that you are acting on intuition, and it would help you correct course if you did.
These acts of irrationalities are caused by what is known as cognitive biases. And in this post, we will look at 10 of them that are some of the most common ones.
- Sunk Cost Fallacy: When you continue to engage in a particular behavior because of previously invested time and resources, that is sunk cost fallacy. Example; Sitting through a movie that you are bored of just because you already paid for the ticket.
- Self-Serving Bias: Taking credit for positive outcomes to protect your self-esteem while blaming outside factors for negative consequences is called self-serving bias. For example; You accepting the praise for getting good grades but blaming the teacher when you get bad grades.
- Hindsight Bias: Believing that you accurately predicted an event before it happened or having a perception that past events were straightforward to predict is known as hindsight bias. For example; You send a job application hoping that you'd get selected, and when you do get selected, you start claiming or believing that you always knew it would happen.
- Planning Fallacy: Underestimating the time needed to finish a project and setting an optimistic deadline based on that assumption is known as the planning fallacy. For example; You assuming that you would be able to complete a task well ahead of time, waiting till the last minute to finish it, and then overshooting the deadline.
- Randomness Error: Trying to create or perceive meaning from random events based on false information or superstition is known as randomness error. For example; When you wear a particular color shirt to a client meeting, thinking that it is lucky because you cracked a deal the last time you wore it.
- Confirmation Bias: Searching for, recalling, or interpreting information in a manner that confirms or supports your existing beliefs or ideas is known as confirmation bias. For example; If you believe that a particular football player is better, you'll likely seek or assert data supporting your belief.
- Survivorship Bias: The error of only concentrating on people or ideas that made it past a selection process while ignoring the ones that didn't make it is known as survivorship bias. For example; Pointing to Bill Gates, Steve Jobs, and Mark Zuckerberg and claiming that people who drop out of college are successful while ignoring millions who dropped out and never made it.
- Framing Bias: You have a framing bias when you decide based on how the facts are presented instead of what the facts objectively represent. For example; A beverage that claims to be "80% fat-free" will be perceived as much healthier and have more buyers than marketing it as "20% fat".
- Anchoring Bias: When you rely heavily on the first piece of information you are given about a particular subject while making decisions is known as the anchoring bias. For example; When given the price of the most expensive jeans at a store first, you are likely to look at the prices of all other jeans in the store with the first one. Thus, making it more likely that you'll end up paying more for jeans.
- Immediate Gratification Bias: When you make decisions based on what will give you the quickest or the most immediate rewards instead of what is objectively better is known as immediate gratification bias. For example; You checking and responding to non-urgent emails during work while putting essential tasks on hold that will actually benefit your career.
Decision-making is challenging, and these biases make it harder. Hence, you must be aware of these biases to build systems that can reduce the risk of irrational decisions.
A good rule of thumb would be to employ scientific methods to make decisions instead of relying on intuition riddled with biases. If you can prove something to work under logical scrutiny, it is likely more rational.
So what cognitive bias do you fall for the most?