Uncovering the Six Common Biases That Shape Our Decisions and How to Overcome Them
Do you think you’re immune to bias in your judgments and decisions? Well, you may be…but it’s doubtful that you’re completely free from all biases. That’s right, there’s more than one kind of bias. I’ve got a list of six, the six most common biases, and that’s what we’re going to explore today. I’m not going to go so far as to say that all bias is bad, but in order to decide whether a particular bias you’re experiencing is good or bad, you need to be able to recognize it and understand it.
Let’s define the word “bias” in general, first. Bias is a tendency to lean in a certain direction on a topic. It may be unconscious or it may be completely conscious. Bias affects how we perceive and interact with the world. Bias falls under three broad applications. Cognitive bias is seen in systemic patterns of deviation from norm or rationality in judgment. Social bias includes prejudice and stereotyping. Statistical bias is a systemic error in data collection or analysis that skews or slants the results.
Bias can influence personal decisions, scientific research, public policy, and more. Our own awareness of our tendency toward bias can help us ensure fairness and objectivity in our thoughts and actions. Recognizing and overcoming bias is important for informed decision-making, fairness and equity, critical thinking, improving our relationships, and enhancing our problem-solving.
The Six Biases I describe below don’t map exactly to those three applications, because different schools of thought tend to address the study of them differently. I think that the Six Biases do a better job of describing bias as we experience it in ourselves and others, so that’s the route I’m taking. I’ll be expanding the topics of Confirmation Bias, Anchoring Bias, Availability Bias, Hindsight Bias, Overconfidence Bias, and The Halo Effect.
Confirmation Bias
Confirmation Bias is the tendency to seek information that confirms existing beliefs. I see this a lot on social media, and I’ve been guilty of it myself. Someone posts something that is different from what you believe. You go on a hunt for information to prove them wrong. Regardless of what you find, you’ll only truly believe the data that supports your position. Another example is when an investor seeks information to support her belief that a particular stock is going to go to the moon. She’s likely to give more weight to the analyst reports that support that belief.
Confirmation Bias absolutely will prevent you from seeing truth and fact. In these two examples, you can easily see what the impact might be. We see it in the political polarization in the world today. A holder of any position is absolutely certain that their view is the accurate view and that any other view cannot be valid. Obviously, that cannot be a correct statement for all holders of opinion. Ignoring stock analysis that indicates that one’s current favorite is not a great investment can lead to financial loss.
How does one mitigate the effects of Confirmation Bias? It takes an intentional effort. You can start by seeking out, rather than stumbling on, diverse perspectives. Look actively for information and viewpoints that challenge what you believe today. Engage with people who have different opinions, and purposefully consider their arguments. It’s one of Dr. Steven R. Covey’s Seven Habits of Highly Effective People: “Seek first to understand, and then to be understood.” (If you’re not familiar with the book, drop everything and go read it.)
Something else that can help is deliberately questioning your assumptions, especially when you’re absolutely sure you’re right. Ask yourself why you believe what you believe. There won’t always be a concrete, scientific answer. When asked why I am a member of my church, my honest answer is that the Holy Ghost manifested an answer to my question about it. I needed to be sure that my belief was based on evidence and not preconceived notions.
It’s also important to analyze the sources of our information. Are they credible? Do they have a bias? Having a bias doesn’t by default negate credibility, but if they do have a bias, it’s possible that their source of information isn’t entirely without bias.
Often, just being aware of confirmation bias, or of a possibility of it, can help us recognize it in action and take measures to counteract it. If we adopt an open-minded approach, being willing to adjust our own views based on new, credible information, we might find a whole new set of information.
Anchoring Bias
Anchoring Bias happens when we rely too heavily on the first piece of information we encounter. First impressions can be an example of Anchoring Bias, if we don’t let someone’s second impression override the first one. Pricing is another example of this kind if bias. If you notice that “everything is always on sale,” that’s Anchoring Bias. The price of a jacket is listed at $200, but today it’s on sale for $100. You’re thinking you’re getting a $200 jacket for $100, but most of the time, you’re getting a $100 jacket. It’s an effective sales technique. It also happens in negotiation, when one party sets the “anchor point” by naming a price. All of the offers afterward revolve around that price point. At a car dealership, the sticker price is that anchor point. We all know that in most cases, there’s plenty of room for negotiation off that sticker price, but the numbers are still going to revolve around it.
Anchoring Bias can distort our judgment. Later numbers might seem more reasonable or more extreme, depending on that first number, but that first number is always going to stay in your head. Sometimes, people will stay too close to that anchor, too, rather than taking in new information that suggests they should move away from it. When you’re making numerical estimates, anchors can bias your perception. If you hear from one person that your car is worth $30,000, you’re unlikely to believe it’s worth one penny less than that, regardless of where you heard it and what it will actually fetch on the car market. Finally, knowing that “everything is always on sale,” or perhaps ignoring that fact, you may be persuaded to pay more for an item than you need to, by being convinced it’s actually half-off.
While falling into the Anchoring Bias trap is easy, it doesn’t have to be inevitable. Just by being aware of the possibility can help us recognize when it might be influencing a decision. Taking some time to think about a decision can be helpful as well. Also, sometimes it’s helpful to get another perspective. Ask someone you trust what they think. We should get into the habit of always questioning the first thing we hear – that initial statistic, that first price. Our decisions can be based on empirical data and factual information rather than just our initial impressions or arbitrary figures. (Check out my post on Data Driven Decision Making.) Finally, before you go into any negotiation or decision, put down your own number based on what you think is right or fair and your own research. Let that be your anchor, and let all other figures revolve around that.
Availability Heuristic
The Availability Heuristic is the act of overestimating the likelihood of events based on recent experiences or memorable events. We see examples of this amplified by media coverage of just about anything. For example, shark attacks are extremely rare, but if you hear a lot of news stories about them, you’re likely to think they’re pretty common. This happens when several stories run about the same incident, as well as coverage of different incidents. Watching a lot of crime news will make people believe that crime rates are a lot higher than they actually are. Hearing a lot about a particular disease can make people overestimate their chances of coming down with it. Seeing advertisements of big wins and jackpots at casinos and for lotteries can make people overestimate their own chances of hitting it big.
We face the possibility of overestimating actual risk due to the Availability Heuristic. One example is fear of flying due to several sensationalized plane crashes. We might misjudge the frequency of actual events, like he shark attacks and crime rates. We can also end up reinforcing stereotypes if we spend too much time seeing particular groups featured on crime shows.
How do we combat the Availability Heuristic? Seek out actual data, for one. News shows go with the “If it bleeds, it leads” concept for their stories, so they don’t want you to know that shark attacks are actually pretty rare. That sort of minimizes the impact of their story. You can also examine your first impression, and then consider why it might be wrong. Once again, it’s also helpful to diversify your sources so you get a broader set of perceptions. Just for fun, analyze some of your past decisions to see if the Availability Heuristic was influencing them or misleading you. You can use that insight to make better decisions in the future.
Hindsight Bias
Hindsight Bias is funny. It’s believing that events were predictable after they have happened. You’ve seen it, I’m sure, if you’ve watched any sporting game with a rabid fan. After a spectacularly good or spectacularly bad play, someone will say, “Yup, I knew that would happen if they did that.” After a stock rises or falls significantly, some investors might think they knew the outcome all along. After major political events, like elections or economic upsets, there are some people who believe that the signs were clear along, even if they had different expectations beforehand. And unfortunately, some doctors might believe that they should have diagnosed an illness sooner once the diagnosis is clear. It’s a case of our brains rewriting history.
Letting ourselves get away with it can give us an inflated sense of our predictive abilities. We might also blame ourselves or others for not anticipating outcomes that are only evident after they’ve come to fruition. Hindsight Bias can also keep us from learning from our experiences, because it distorts our understanding of why things happened as they did. It can lead to poor decisions in the future, because we overestimate our ability to predict events based on past occurrences.
How do we keep ourselves from the pitfalls of Hindsight Bias? Well, if we’re making an important decision, we can document it when we make it. Journaling is a good way to keep track of decisions, but it might also be something you do just for fun to see how well you are able to predict the outcomes of your decisions. When you’re looking over the past, it’s important to accept what actually did happen, but it can be helpful to think about all the ways it could have turned out as well. It might be interesting and useful as well to try and imaging how someone else might view your situation, looking at it objectively. Finally, don’t beat yourself up if you don’t always get your predictions right. We’ll never know everything we need to know to make 100% accurate predictions.
Overconfidence Bias
Overconfidence Bias is just what it sounds like — overestimating your abilities, knowledge or prediction accuracy. There are investors who do this regularly, thinking they have a special insight, and it’s the thing that took down Barings Bank. Many emerging entrepreneurs experience it as well, thinking they’re ready to start a business without knowing what they need to know, but still confident that their efforts will succeed, even in the face of high failure rates in that field. Students may overestimate their readiness for an exam, causing them to give them sufficient study time, and sometimes managers commit to unrealistic deadlines, being overconfident in a team’s ability to complete a series of tasks faster than they can actually do it. It’s the kind of bravado that has people believing they can perform a risk act that has brought harm to others, but they don’t see how it could happen to them.
Overconfidence Bias can lead to a poor risk assessment, which can carry us to reckless decisions. It can cause us to ignore advice (if you have teenage kids, I’m sure you can relate). It can keep us from putting in the preparation time and effort we really need, and it can block opportunities to learn from mistakes.
To deal with Overconfidence Bias, we need to balance confidence with caution. We need to question our own assumptions and beliefs, playing devil’s advocate with ourselves. It’s also helpful to get feedback from others, especially if they’ve walked the road we’re looking down. Breaking our goals down into digestible bites is helpful, making sure we celebrate the small wins, but being realistic about the challenges. We also need to stay curious and always be willing to learn from both successes and failures.
The Halo Effec
The Halo Effect is the most curious one to me. It’s defined by forming an impression based on one positive trait, which leads to overlooking flaws. One place we might see this is in job interviews, where an interviewer may consider a particular candidate to be more qualified or competent because they’re well-dressed and articulate, while overlooking a lack of experience or some crucial skill. Celebrity endorsements are one of the reasons that I find this one curious — people think that because their favorite star or performer endorses a product, it must be superior. In school, a teacher may think a student is academically advanced because he’s well-behaved, even if their academic performance is only average. Additionally, we might come to believe that a company’s product quality is very high if we have a positive customer service experience with them.
The Halo Effect can cause us to misjudge someone’s overall character based on one positive trait. We might come to overlook faults or downsides, hiring someone who can’t do the job because we liked the way they spoke. We might end up with unrealistic expectations that can’t be met with the reality. We also might allocate resources (time and money) to projects or people based on initial impressions rather than actual merit.
So how do we keep from falling prey to the Halo Effect? Well, we start by setting objective criteria for evaluations, and we stick to them. We also invite someone else to evaluate the person or idea we’re judging. Once again, it can be helpful to avoid making a decision right away. It’s amazing how sleeping on a decision helps us think about it more rationally. Finally, if you have the option to remove identifiable information that could prejudice your choice, see if you can remove that so you can focus solely on the important metrics.
Your Turn
I can think of innumerable examples of all of these biases, examples from my own life of which I’ve been guilty. Fortunately, I can see them in my own life as well as from others, because it has helped me be more aware of it when I’m on the verge of acting on a bias.
What about you? Do you have an example of one of these biases? No judgment, we’re all human here. What’s one bias you’d like to be more aware of in yourself? Drop a comment below and let’s keep the conversation going.
Here’s a link to an article that addresses a couple more biases, with more suggestions to help you be aware of then and prevent them from influencing your decisions:
Types of Decision-Making Biases (And How To Recognize Bias) | Indeed.com
My photography shops are https://www.oakwoodfineartphotography.com/ and https://oakwoodfineart.etsy.com, my merch shops are https://www.zazzle.com/store/south_fried_shop and https://society6.com/southernfriedyanqui.
Check out my New and Featured page – the latest photos and merch I’ve added to my shops! https://oakwoodexperience.com/new-and-featured/
Curious about safeguarding your digital life without getting lost in the technical weeds? Check out ‘Your Data, Your Devices, and You’—a straightforward guide to understanding and protecting your online presence. Perfect for those who love tech but not the jargon. Available now on Amazon:
https://www.amazon.com/Your-Data-Devices-Easy-Follow-ebook/dp/B0D5287NR3
