4 cognitive biases you should be aware of

These cognitive biases could be spoiling your decisions with incorrect perceptions. Understanding cognitive biases and overcoming them lies at the heart of negotiations, risk-taking, investments, finding customers, making a business plan, developing relationships, choosing a moral side, debating, increasing sales, proving a point, making healthy decisions, etc. This is an endless list. Basically, anything that needs attention, observation, decision-making, and perspective, can be compromised because of cognitive biases.

Cognitive biases you should overcome to think clearly

… Thinking mistakes that the brain makes unknowingly.

We all fall for them. No one is immune, and it kinda makes us human too. The surprising thing I discovered recently was that even AI has cognitive biases, but they are fundamentally different.

Let us dive right in.

The confirmation bias

Perhaps the most significant and elusive of all biases. Consider the example of person XY being anxious about social situations. Such a person may have an underlying feeling of social rejection. When XY is invited to social hangouts, XY may reflect upon details that support the idea that he/she would be socially rejected. XY can confidently point out to 10 examples of why this would be true. This is the confirmation bias. It is highly likely that XY selected information from previous experiences that support the notion of his/her social rejection. However, this may not be objectively true. In fact, in day-to-day life, most of us unknowingly do this. We have beliefs and pre-conceived notions like “The government is bad” or “The police are corrupt”. Sometimes, we hear stories that make us confirm this belief, and once that is done, we end up ignoring stories that oppose that belief. Confirmation bias is defined as the tendency to search for, interpret, favor, and recall information in a way that confirms one’s preexisting beliefs, notions, and hypotheses.

Confirmation bias makes us highlight information that supports our current beliefs and ignore information that does not support our beliefs. Many religious fanatics are victims of this. They may have a worldview about some doomsday prophecy or a transcendental interaction with the almighty which partakes in the confirmation bias. All stories that indicate the end of days are considered as testimony to their beliefs while all successfully averted disasters are ignored. Similarly, scientists and business owners also fall for it. A scientist may get committed to a hypothesis and continue testing it till 1 bit of evidence supports it. A business owner can have a preset belief about how economics works and what their customers feel. If those beliefs are not supported by evidence, they may lose out on business opportunities. Another area is where we tend to use confirmation bias as proof for pseudoscientific claims. A popular myth is that left-handed people are more creative and this is a result of the confirmation bias. Once we hear the myth (Christian 2013), we are more likely to notice the creative side of left-handed people.

The conjunction fallacy

How often do we make mistakes in guessing the likelihood of something happening in our society? More often than not. Let us take an example.

Let me tell you the story of Rakhi. She is the only child of her uneducated parents. She studied well and stood on her feet through the years. She had her personal battles and ultimately, after thinking about her own future, chose to get into banking.

5 years late…

What is a 33-year-old Rakhi more likely to be doing?

• a) Working happily at a bank 
• b) Working happily at a bank and is a feminist 

Chances are, again, most would conclude the latter option. This bias occurs because of the specific details. Humans have a tendency to focus on the specifics and conclude erroneously.

1. In option a, only 1 condition has to be satisfied, i.e., she has to be happily working at a bank (P). 
2. In option b, 2 conditions have to be satisfied, i.e., she has to be happily working at a bank (P) and is a feminist(Q). 

In terms of probability, the second option is less likely, simply because the number of conditions to be satisfied is more than the first option. The two details, ‘female’ and ‘feminist agenda’, are semantically and socially associated. Thus, option ‘b’ seems erroneously more probable.

Probability of ‘a’ = P

Probability of ‘b’ = P x Q

Since probabilities are between 0 and 1,

P x Q < P (The probability of 2 things happening together is always lesser than that of one of those things by itself)

In short, the conjunction fallacy is the tendency to believe that some specific conditions are more probable than a single (or fewer) general one(s).

The anchoring effect

Have you been to a shopping mall where you see a good looking pair of shoes for a lot of money and then a salesman tells you that there is a 20% discount on it? Chances are that it is more attractive than an equally good-looking pair of shoes for the discounted price but without the discount. Nobel Laurette Daniel Kahneman and his colleague Amos Tversky conducted an experiment (Kahneman, Thinking fast and slow 2011) in which they asked people the following question – What percentage of African countries are a part of the United Nations? Two equal groups were created. One group was asked – Is it greater or lesser than 10%? The other group was asked – Is it greater or lesser than 65%? The first group answered an average of 25% and the second, 45%.

Researchers concluded that there must be something inherent in the question itself that influenced these answers. Asking the groups to compare it to 10% or 65% was the influencing factor which they termed ‘The Anchor’. Repeated experiments (Kahneman and Tversky, Judgement under Uncertainty: Heuristics and Biases 1974) with other random anchors supported this finding and concluded that humans estimate based on arbitrary reference points and sometimes, predetermined reference points.

In our example of shopping for shoes, the original cost of the shoes becomes the anchor and hence the discounted rate seems more attractive. We see news updates such as ‘15 people were killed in a bomb blast’. Skeptics often disbelieve such numbers and assume that the media channels are hiding the truth. Perhaps they are. But, it is important to note that they gave us an anchor. Sceptics would probably estimate something around 20 as the actual number. Imagine there is another news update saying that 200 people died in a terrorist attack. Our anchor has changed. Would the skeptic guess 215 or 220 as the actual number? Quite unlikely. The skeptic would guess something much larger, say 300. The reason this happens is that we think in proportions around the anchor, like 20% extra, 30% extra. Go to a store to buy some groceries and you’ll notice that products have tags like ‘20% extra’. Manufacturers know that would be more attracted to 20% extra than 35.6 grams extra. Humans are predisposed to think in proportions/ratios around an anchor.

Regression to the mean

Weather patterns can teach us a life lesson: Natural variations. Regardless of what we try to control and how meticulous we are in doing so, the expected result may vary. For example, a teacher grades students on 2 different semesters and finds out that the highest scorers from the first semester are no longer the highest. Is it because they studied differently? Probably not. This is likely to be a natural variation. So should the teacher punish the students who did poorly and praise those who excelled? It is best to let them be as they are, with simple encouraging remarks. Through natural variation, the top scorers are likely to continue scoring high but may occasionally lose the #1 or #2 rank.

Quite often in sports competitions, we see 1 player perform great on one day and slightly worse on some other and then regain his/her form. Perhaps it’s a record high temperature in your area; chances are that within a few days, this will return to its ‘average’. It is unlikely that the temperature will always be a record high. Regression to the mean is the tendency that natural variations occur with a tendency to gravitate toward their mean (Dobelli 2013).

Do look out for these biases in your life. Overcoming them would help you think clearly and objectively and thus, make smarter decisions and observations. I’ve already written a piece on how to counter cognitive biases and a special case of biases that matter while dating and finding a romantic partner.

Take this quiz to see how many cognitive biases you can spot.

Can you spot these Cognitive Biases? [9 scenarios, Quiz]