The work of Kahneman & Tversky on cognitive bias led to a Nobel Prize. It also provided us with a window into the inner workings of our mental processes. Whatever the cause our biases influence how we view things and make decisions. Knowing we are biased can help us pay attention to tendencies that may lower the quality of our decisions.
We:
- Think others agree with us more than they actually do
- Accept data/hypotheses that agree with what we believe/want to be so more readily… resist contradictory evidence
- Accept too readily conclusions based on inadequate samples
“four employees complained about this policy last week… angst is rampant”
- Rely on literature that reports only successes and not on failures
- Believe that intuitive conclusions are valid
- Overuse similarity as a simplifying heuristic
“candidate is great (thinks/looks like me)”
- Assign weight to evidence based on its availability
“recency bias; familiarity bias”
- Do not adequately consider regression to the mean
“why did the best performers last year seem to do worse this year?”
“giving a QB a huge raise because of a great year may prove to be foolish”
- Assume quantitative data has higher validity than subjective data
- See puppies and other shapes in clouds… this is System 1 thinking (intuitive/automatic/emotional); realizing that it is silly is System 2 thinking, which takes considerable effort
- Think the world makes much more sense than it does
- Sometimes answer a simpler question when we have no answer to a complex question – System 1 is puzzled and System 2 goes to work
- Can learn to apply System 2 control over impulsive conclusions reached by System 1 with training but emotional intensity of issue makes it harder
- May use repetition of anything, even falsehoods, to make something seem more feasible
- Are overly prone to assume causation when we see correlation
- Believe we are too intelligent to be prone to bias… believe that rationality is used and overrides impulse
- Know less about how we think than we think we do
- Are primed to make associations by recent/repeated experience
- Falsely believe that a “hot hand” in sports or in gambling exists
- Believe a lot of experience makes us wiser – a lot of experience is generally good but we need to organize the experience to make it relevant/useful
Robert J. Greene | Reward $ystems, Inc. 