Both sides of the Atlantic are firmly in the grip of election fever, we are facing a daily bombardment of news, with clearly no party subscribing to the idiom that ‘no news is good news.’ Without getting philosophical, why are all sides evangelical in delivering such fear-ridden, doom-laden scenarios? Not to mention misleading statistics! Each side clearly believes that they are right and their competitors are deranged, indeed even morally bankrupt in some cases. But one thing we know to be true is that they are not both right. So, why do they think that they are?
Each side has made a decision about what they believe to be the appropriate view or belief. Logically, then, any alternative views are inappropriate, thus wrong. Each side believes that they alone are seeing the world as it really is, without bias or error, forgetting that perception is reality and not an objective assessment.
Our brain is an incredible piece of biotechnology. It is capable of 1016 processes per second, making it far more powerful than any computer currently in existence. But it tricks us daily into believing our choices are logical, rational and of course right! The truth is that we are all biased. Our views are shaped by preconceived notions and patterns of thought that influence our beliefs and lead us astray without us ever realising it.
When psychologists such as Daniel Kahneman, Paul Slovic and Amos Tversky applied meticulous scientific methods to understanding human behaviour, our self-deceptions were named, categorised and in some cases, even quantified.
There are three mind traps that trick every one of us: cognitive biases, heuristics and logical fallacies. It’s down to them that we believe we are always right! For the most part they serve us well, but knowing why we behave the way we do lets us use that knowledge to make better decisions.
Cognitive biases are predictable patterns of thought and behaviour that lead you down the garden path to make incorrect conclusions or take illogical action.
Why do they matter? They can lead us to make questionable decisions, bad judgements and to reach erroneous conclusions.
The most well-known and common in business decision making are:
- Confirmation bias – we tend to look for and favour information or evidence that confirms or supports our pre-existing views and beliefs while, at the same time ignoring or rejecting data that challenges these views.
- Anchoring bias – tendency to jump to conclusions and rely too heavily on the very first piece of information we hear. We use it as an anchor for all future decision-making.
- Status quo bias – tendency to dislike or be fearful of change. This leads us to make choices that guarantee that things stay the same, or change very little. This is why we like routines and have favourite brands, shops and restaurants.
Heuristics are mental shortcuts or rules of thumb we use to solve common problems and to make everyday decisions quickly without having to spend a lot of time researching and analysing information. They use past experiences to enable quick decision-making. The advantage is their speed, but the problem is that this can result in inaccurate decisions. Just because something has worked in the past doesn’t mean it will work again. Relying on existing heuristics makes it hard to see alternative solutions or to come up with new ideas.
Common heuristics are:
- Availability heuristic – tendency to overestimate the importance of information that is available to us, or how many examples readily spring to mind. As these are at the forefront of our memory, we judge these outcomes as being more common or frequently occurring than they really are. We believe something is common if we can find one example of it and are less likely to believe in something we’ve never seen or heard of before.
- Affect heuristic – tendency to make decisions dependent on the positive or negative feelings associated with the stimulus, or “going with your gut”. If your feelings towards an activity are positive, then you are more likely to judge the risks as low and the benefits high. Conversely, if your feelings towards an activity are negative, you are more likely to perceive the risks as high and benefits as low. We depend on our emotions to tell us if something is good or bad, greatly overestimate rewards, and tend to stick to our first impressions!
- Representativeness heuristic – tendency when we are confronted with a new experience of our brains relying on past experiences or mental representations that seem similar to guide our judgments and decisions. It’s a shortcut that helps us make a decision by comparing the present situation to our most representative mental prototype, meaning we jump to conclusions based on how representative a person seems to be of a preconceived stereotype.
Logical fallacies are basically errors in reasoning. It’s where you reach a conclusion without all the facts either because you don’t want to hear them or because you have no idea your information is incomplete. They are also the result of wishful thinking – you apply good logic to false evidence or poor logic to the truth!
Why do they matter? Without the ability to identify logical fallacies in the arguments of others and to avoid them in your own, you become vulnerable to manipulation by those skilled in the art of rhetoric.
Common in business decision-making are:
- Gambler’s Fallacy – tendency to put a tremendous amount of weight on past events believing that they will influence future outcomes. It is the belief that, if something happens more frequently than normal then it will happen less frequently in the future and vice versa. It’s misguided because past events do not change the probability that certain events will occur in the future. The classic example is coin-tossing – faced with statistically unlikely six coin tosses in a row landing heads-up, we expect the next coin toss to land tails-up!
- Bandwagon Fallacy – tendency to believe that an argument is valid because the majority of people accept it, so you should too! Loyalty to a group and the need to belong give very strong reasons to additionally conform to the views and positions of those groups.
- Genetic Fallacy – tendency to accept or reject an idea or position on the sole basis of where it came from, or from whom it came from, rather than on merit.
We live in a fast, rapidly evolving and highly pressurised society. We are tired, stressed, hassled and overwhelmed. Don’t make matters worse and be a victim of your own biases. Take some time to outwit them through ensuring that yours and other people’s actions and decisions are founded on true facts and grounded in reality. It will be worth it in the end.