12 Cognitive Biases

1. Anchoring Bias

• Reliance on the first piece of information received when making decisions.
• Example: If a car's initial price is $30,000, a subsequent offer of $20,000 seems cheap.
• Comparatively, if the initial price was $10,000, the same $20,000 offer seems expensive.
• Another example: Estimating the height of the tallest tree.

2. Availability Heuristic Bias

• Overestimating the importance of information that is readily available.
• Example: Believing terrorism is a leading threat because it is frequently covered in the news.
• Statistics show other causes (like falling coconuts) are more likely to cause death.
• Decisions based on media rather than facts and statistics.

3. Bandwagon Effect

• Doing or believing something because others do.
• Examples: Voting for a popular candidate, buying a stock everyone is buying.
• Opposite in management: “Groupthink” where dissenting opinions are squelched.

4. Choice Supportive Bias

• Defending choices because they were personally made.
• Example: Favoring an Apple computer and ignoring its flaws because you chose it.
• Similar bias when evaluating pets or political candidates.

5. Confirmation Bias

• Focusing on information that confirms pre-existing beliefs.
• Example: Searching online for how bad sugar is, confirming belief that sweets are unhealthy.
• Dangerous in scientific research due to ignoring contradictory evidence.

6. Ostrich Bias

• Ignoring negative information deliberately.
• Example: Smokers ignoring the health risks of cigarettes.
• Procrastinating on unpleasant tasks, pretending it will resolve on its own.
• Promotes ignorance in various contexts including scientific research.

7. Outcome Bias

• Judging decisions based on their outcomes rather than the decision process.
• Example: Trusting gut decisions when they turn out successful despite contrary evidence.
• May lead to long-term poor decision-making.

8. Overconfidence

• Being overly confident due to past successes.
• Example: A successful stock trader ignoring facts due to past winning streaks.
• Compare to Gambler’s Fallacy: expecting past random outcomes to affect future probabilities.
• Discussed in the book “Ego is the Enemy.”

9. Placebo Bias

• Believing in positive effects of something often leads to actual positive effects.
• Example: Recovering from an illness after taking a sugar pill because you believed it was medicine.
• Positive thinking leading to better life outcomes.
• Can be used advantageously but has a reverse (negative) effect known as “Nocebo.”

10. Survivorship Bias

• Focusing on successful cases and ignoring failures.
• Example: Articles on millionaire habits ignoring people who followed them and failed.
• Misjudging ancient engineering based on surviving buildings only.

11. Selective Perception

• Perceiving messages and actions according to pre-existing beliefs.
• Example: A smoker ignoring negative smoking ads but noticing positive soccer ads.
• Subconscious filtering based on individual perceptions.

12. Blind Spot Bias

• Believing oneself to be less biased than others.
• Example: Teachers denying personal biases but admitting biases in others.

Closing

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