6 cognitive biases that lead to bad decision-making
We all have our biases.
They are the brain’s way of reducing the effort it takes to deal with the cosmic amounts of information hurled at us every single day. We fill in the gaps and connect the dots with things we believe we already know, in order to act as quickly as we can. This is excellent for avoiding predatory animals. However, it isn’t so great for solving customer issues, devising strategies, and making difficult decisions.
Unfortunately, simply knowing about biases will not make them disappear. We have to actively design our interactions to expose and avoid them to the best of our abilities.
Cognitive bias is a judgment error, a bug in evaluating or remembering (or another process of cognition) made when a person holds onto personal likes and beliefs despite contrary information.
Take a look at these 5 cognitive bias examples to be aware of.
1. Confirmation bias
It isn’t clear how this one evolved, but you’ve definitely seen it in action. People do not like changing their opinions. Rethinking our most fundamental beliefs once they have formed is hard and definitely not a pleasure to experience. It is much easier to just ignore any information that challenges our most precious ideas than it is to engage with uncomfortable new information. But often that is just what we do. It is called confirmation bias.
Overconfidence can often lead to bad decisions. Overconfident people tend to take greater risks because they have higher self-esteem and believe in themselves more than others. This kind of attitude is thought to be more common in experts than laypeople. But why? The answer is simple; these people are cocksure that they are always right.
Even though anchoring is beloved by the business world, you must be aware of anchoring as a customer. The term refers to the tendency to cling to a number as soon as we hear it and evaluate all other offers based on that first number, even if that bit of information is not the most important. Hence, if you tell people they can only have ‘four pieces per customer’ they will be much more likely to buy four of whatever you are selling, regardless of whether they even intended to buy only two and don’t really need more than that.
4. Choice supportive bias
All of us are guilty of this. We often make decisions based on our preferences. There is nothing wrong with this way of thinking but if you make a choice based on your likings, as opposed to it being the wiser decision, then you are falling into the choice supportive bias trap. To fully understand the best way forward, try considering all options.
5. Halo effect
Our brains are lazy and prefer consistency, and that includes consistent ideas about a particular entity or person. A lot of our mental resources are taken up by internal contradictions. And that is why when someone makes a positive impression with small talk and self-representation at the start of a job interview, you are more likely to see their professional achievements in a similarly positive light later. Your strong first impression throws a glowing halo of positivity over all the information that follows.
6. Blind spot bias
If you are unable to see your own faults that are blatantly obvious to other people, then you are blind spot biased. Most of us are able to see motivational and cognitive biases in other people but not in ourselves. If you are failing to see the faults in yourself, it may strongly affect your decision making.
Now that you are aware of the different types of cognitive biases, please do not allow them to ruin your decision-making process.
Do you know of any other cognitive biases we may have missed here? Let us know by joining the conversation in the comments and please share this article if you found it helpful.