Decision-making is a critical life skill. Yet, the vast amount of information flowing to us often causes us to take shortcuts in our information processing.
It is human nature to process information in a way that supports our own beliefs. This is not inherently wrong as it helps us think faster and more efficiently. The downside is, we often speak with confidence about things we don’t fully understand.
Let’s explore some of the cognitive biases to be mindful of in our decision-making.
1. Confirmation Bias – Tendency to favor information that reinforces what we believe. You hear from several people that walking is better than jogging. Therefore, you’ll be more inclined to read articles that confirm this statement rather than articles offering a different opinion.
2. Anchoring Bias – Tendency to be overly influenced by the first piece of information obtained, no matter how reliable it is, and using it as a baseline for comparison. While shopping for a vehicle, the salesperson quotes you a price of $50,000. You return the following week and negotiate a purchase price of $40,000. This seems like a great deal considering the original price quoted. However, if $30,000 is the initial quote, $40,000 wouldn’t look like the best price after all.
3. Bandwagon Effect (“groupthink”) – Tendency for people to adopt a behavior or attitude based on what others believe regardless of the underlying evidence. Voting for the most popular candidate in an election because you want to be part of the majority.
4. Halo Effect – Tendency to be influenced by previous judgments of performance and personality. Assuming a good-looking person is also a good person overall.
5. Availability Bias – Tendency of people relying on information that comes to mind quickly and easily. Fear of a shark attack because you hear a lot about it in the news while you’re more likely to succumb to heart disease than being attacked by a shark.
6. Ostrich Effect – Tendency for people to avoid information they perceive as potentially unpleasant. Instead of dealing with a situation, some people prefer to bury their heads in the sand, like ostriches. Avoiding relevant feedback that could help you get a better understanding of a situation.
7. Recency Effect – Tendency to remember the first and last items in a series while finding it challenging to remember the middle. You’re in a meeting, and the speaker is explaining an important concept. This person speaks relatively fast, and you are unable to capture everything shared. As a result, you notice you only took notes of the first few words and last few words.
8. Choice-Supportive Bias – Tendency to remember our choices as better than they were, as we tend to over-focus on the benefits we chose versus the options we did not choose. Attributing more positive features to a favorite brand in favor of brands we have not experienced.
9. Fundamental Attribution Error – Tendency to assume a person’s actions usually reflect who they are as an individual. Assuming the reason a driver cuts us off is that they are selfish or careless when this individual may be dealing with an emergency.
10. Outcome Bias – Tendency to judge the quality of a decision made primarily based on how things turned out rather than analyzing factors that led to the decision. Making all of your decisions this week based on flipping a coin. If most of the outcomes are positive, you may think this is a great way of making decisions.
11. Illusory Correlation Bias – Tendency to inaccurately link an action to an effect. Believing that wearing a specific jersey will give your favored team a higher chance of winning.
12. Dunning Kruger Effect – Tendency to overestimate our competence in a specific area. You commit to learning a new language and learn the basics fast. Yet, you realize more progress is needed to become fluent. On the other hand, your friend studied the same language, learned a few words, and overestimates their ability to speak the language.
Keeping these biases in mind can considerably improve our ability to think critically.
Source: Adapted from ehl.edu / Graphic: Visual Capitalist
One thought on “Decision Making”
Education and living environment would be another factor in decision making