Have you ever made a decision that did not turn out as well as you hoped? Have you ever walked away from a purchase or a negotiation feeling that you could’ve gotten more for your efforts?
You’re not alone. Sometimes, a bad result is just due to chance. Other times, however, a cognitive bias is to blame.
What are cognitive biases?
They are patterns of thinking and behavior that are common to almost all people. These thinking patterns cause us to see the world around us inaccurately, to make poor decisions, and they limit our ability to solve problems and think creatively.
Whoa! Those are all things we’d like to do well, especially if you are a creative, or run your own business. Learning about cognitive biases and how to overcome them can dramatically improve your work, creativity, and business decisions.
How about a couple of examples? As you read them, think of instances where you’ve seen the bias in action, either in yourself or in those around you.
Confirmation Bias
Confirmation bias is our tendency to look for information that agrees with what we already believe, and to reject information that conflicts with what we believe.
For example, someone may believe that a particular dietary supplement is effective at curing an illness. They may look for testimonials and stories of people who claim to have had positive results. Meanwhile, they might overlook studies and expert opinions that suggest that there may be no benefit, or that the supplement is actually harmful.
Confirmation bias also determines how we interpret situations that could have more than one valid explanation.
If we believe that “Drivers in my area are selfish jerks,” and someone cuts us off, what might we think of that person? Really, we don’t know why they cut us off, and there are many valid explanations: Driving their sick child to the hospital. We were in their blind spot and they didn’t see us. They’ve had a terrible day, are late for work, and were about to miss their exit. They may even say “I’m so sorry!” aloud as they did it (I have).
True, they could be impatiently trying to get ahead of you, but the point is that limiting ourselves to a single valid explanation closes our minds and may cause us to interpret information incorrectly.
How to Overcome It
One remedy is to “seek dis-confirming evidence,” which means: Don’t just look for proof that you are right. Make an honest effort to look for proof that you are wrong.
In the example of the dietary supplement mentioned earlier, look for evidence that the supplement does not work. Also, consult experts such as doctors or nutritionists instead of relying solely on testimonials and opinions.
Try to come up with multiple explanations for why something happened, instead of sticking with the first one that comes to mind.
This gives us a more balanced view, and we may just discover a better approach.
Anchoring
In 1979, two psychologists tested a theory. They wanted to know if they could influence a person’s estimate for the price of an item or population of a city, for example, simply by showing them a random number before they guess.
Here’s how they tested it: They made a “wheel of fortune” style wheel with numbers between 0 and 100 on it.
Then, they stood “contestants” in front of the wheel, and asked them to estimate percentages using questions like “What percentage of African countries are in the United Nations?”
Before the contestants answered, the psychologists asked them to spin the wheel, which landed on a random number between 0 and 100. Then, they asked the contestant to tell them whether their answer was larger or smaller than the random number. Finally, they asked for their actual guess.
What did they find? The random number from the wheel dramatically affected the contestants’ estimate!
For example, the group of contestants that happened to spin “10” on the wheel answered on average “25%.” The average for the group that spun “65” was “45%.” That’s nearly twice as much!
What was going on? The psychologists discovered that when we are estimating a number, like the price of a house or the distance from where you live to another city, we either consciously or unconsciously start with a known number and work from there. That number “anchors” us, so that our estimates are near to it, regardless of whether the anchored number is relevant.
It was a simple experiment, but that discovery has shaped the marketing and sales tactics that we see every day.
We see the anchoring effect at work in the multi-tiered pricing packages for online-services, the many “discounts” and “sales” in stores, and when negotiating salary offers.
For example, let’s say that you are shopping for a used car. At the dealership, you notice that all of the cars have two stickers: one for what the car cost when it was new, and another with the used sale price:
“New: $34,995“, “Sale Price: $24,995.”
At first glance, who wouldn’t be happy to pay $10,000 less than the original price? What a deal! But be careful: the “Sale Price” could be far above fair market value. By displaying it side-by-side with the larger “New” price, the inflated sale price looks like a much better deal than it actually is.
How to Overcome It
Try to consult a reliable source for information, rather than relying on your own memory. In the example of shopping for a used car, you may consult an online service that gives estimates of fair market value, like Kelly Blue Book.
Now that you know about the anchoring effect, you may be able to recognize when a person or company is trying to influence you with an anchor. It can serve as a warning that it may be worth taking a closer look at the numbers, or to bring in an outside opinion.
Endless Bias
In the decades since cognitive biases were first identified, psychologists have discovered and studied many, many more.
It’s useful to have a basic knowledge of the most common ones, and to practice strategies to overcome them.
If you’re interested in finding more cognitive biases, Wikipedia has an excellent collection of them.
Also, this diagram gives a neat overview of the different types:
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By John Manoogian III CC BY-SA 4.0, Link
Why not pick a few that interest you, and see how they might apply to your business, your creative projects, and your life?