Most of us are of the belief, that we as human beings are objective, logical and rational at all times. The truth is far from this.
Cognitive biases are throughout all decision making distorting our thinking patterns. Before the today’s hyper complex society cognitive biases was actually in most cases an advantage, designed to help us survive in a hunter-gatherer way of lifestyle. Through hundreds of thousands of years our brain has evolved, but today’s brain is very much similar to the brain of the stone age man, despite today’s way of life is vastly different and ever-changing.
To the surprise of most people, many of our cognitive processes are processed in the sub-conscious.
Especially very beneficial for the purpose of doing the right business related decisions, moderns science has mapped far beyond 100 cognitive biases of which this article will focus on a very few of the most important.
I have chosen only a few, since you will, in the case this topic catches your interest and you will look further into this, will find that many defined cognitive biases are overlapping and interdependent.
Confirmation bias is the discovery that people are searching and listening more to information that confirms their presumptions and beliefs.
An example, this bias is particularly evident in people’s search for information about products and services on the Internet. Here, they specifically select articles and pages that confirm their opinions, desires and expectations for specific topics.
Yet another example may be people’s opinion to other individuals. This stand is most often rooted in their first-impressions, and subsequently, depending on whether it is good or bad first impression, then one will try to confirm their first assumption by observations going forward (see also anchoring bias).
Once your mind has formed an initial opinion it is hard to change. In very short confirmation bias is about seeking evidence and confirmation for the answers you favor.
The fact that we tend to be influenced and over-reliant by the first piece of information we get. This bias becomes particular obvious when dealing with numbers. If we are negotiating on prices.
Example: a cars dealer are selling a car. The car dealer will show the potential buyer a particular more expensive car, than the one he is trying to sell the customer. Studies show, that the customer in most cases then perceive their favored car cheaper than they else would, since they subconsciously are comparing it to the more expensive one.
Another example is the situation of a salary negotiation. Whoever makes the first offer are creating the foundation of negotiation, on which any counter offer will be anchored by. So no matter on which side of the negotiation table you are , evidence support, that the one making the opening offer are better off.
The Availability Heuristic
The human mind is not pre-programmed for critical thinking and meta-cognition. Often the mind is seeking the easiest explanation. As examples can be mentioned, if you hear a lot about terror attacks, fatal car-jacking and the like, when asked you will guess and estimate the probability for being the victim of such an incident to be much higher than in reality.
If you never knew anyone getting seriously hurt in a card accident, you will underestimate the importance for safety of wearing a seat belt. ‘
In short people overestimates the importance of the data, that is readily available to them.
The Halo Effect
Halo effect is broadly defined as people carrying one specific positive characteristic, often are perceived having even more.
Tall people are perceived more intelligent. Beautiful people presented to testing groups are estimated to be more kind, charming and intelligent, than less beautiful people.
This cognitive bias has a very powerful impact in selection among job applicants among other.
Several true but unpleasant studies on the impact in real world of Halo effect has been made. One of such is the study by Landy and Sigall who had students write essays. The essays were blinded for details on original author but equipped with a photo of either a very attractive actor or a much less attractive actor. The essays with photo of attractive actor, received in average much better grades than then others.
The Optimism Bias
Also known as the overoptimism bias. We generally are more optimistic on our own fate than reality shows. This is about our minds inability to accept the whole spectrum of reality from good to bad. We believe we are more likely to succeed and overestimate the amount of good things that will happen to us.
We underestimate the probability for serious illness, accidents and tragic life events. On the good side optimism bias reduces stress, and makes us perceive our goals harder. From a Darwinist theoretic standpoint, optimism bias can be explained as a basal need for the hunter to be able to keep up motivation for hunting the prey. Giving up half way is not favoring passing on genetics.