How to Prevent Cognitive Biases from Killing Our Ability to Make Good Decisions
Updated: Mar 17, 2020
It’s natural for most of us to consider ourselves good decision makers as well rational and logical people. However, there are often times when our lapse of judgement leads to rather poor decisions making. Any decision we make is largely affected by cognitive biases. In life, there are many cognitive biases that hold us back, that act as a barrier between us and our true potential. Here, we discuss some of the biases that may be holding you back from making good, impactful decisions and how to tackle them.
The “Present” Bias
Who wouldn’t like to make the most of this moment, optimise it and save the consequences for the future? As humans, we have a tendency to give more weightage to pay-offs that are closer to the present when considering trade-offs between two moments in the future (O’Donoghue & Rabin, 1999). This bias is more generally used to describe immediate gratification in decision-making. Our present bias makes us more inclined towards earning Rs 1,000 today rather than earning Rs 1,100 tomorrow.
While making big decisions, spend a pre-determined amount of time waiting before taking the decision. Use rationality to make the decision and not operate from the impulse of the moment. Remember, not every quick win has positive long-term effects.
The “Confirmation” Bias
Confirmation bias occurs when information is evaluated in a way that fits well with our existing mindset and thoughts (Wason, 1960). This is our tendency to see the evidence only on our side of the table and interpret it in a way that confirms our preconceptions. The biggest downside of this is that it limits our ability to grow and learn. It causes us to generalise, stereotype and not observe the facts as they are.
The first step here is awareness. Be aware that we all operate from biases that are based on our belief systems and experiences but may not always hold valid or true. Open the mind up to the possibility of multiple possible solutions to one problem and to accepting differing opinions.
The Framing Effect
Choices in a decision can be presented in ways of highlighting positive or negative aspects of the same decision. This greatly impacts how the information is received. Multiple framing approaches exist for example goal framing (Levin et al., 1998) where people may be motivated by either offering a Rs 500 reward or imposing a fine of Rs 500. A decision is often affected poorly due to how the choices are represented despite the same implication of the choices.
Be mindful of the facts in the information presented rather than being carried away with their representation. Look at both sides of the statistics and take an informed call. For example, a carton of milk being marketed as “90% fat free” vs one being marketed as “10% fat” is essentially the same but we may prefer one over the other. So, be sure to consider the facts involved before making a decision.
The Bandwagon Effect
The bandwagon effect is our tendency to follow the actions, behaviours or beliefs of a large group of people (Schmitt-Beck, 2015). The likely reason for this is either the need to conform to the group or the need to be right and be accepted. This acts as a drawback because we dive in blindly and begin following groups rather than investing in research and thinking our decisions through.
It’s important to remember that just because a large majority of people are doing something, doesn’t make it right. Be sure to evaluate, research and think through any decisions instead of following blindly.
The "Projection" Bias
The bias describes our assumption that our preferences will remain the same over a period of time (Loewenstrein et al., 2003). It is also our tendency to overestimate the degree to which we think others agree with us. This not only impact us in comparisons to others but also in our estimation of our future selves. This leads us to often make decisions for the future based on the present as we expect no difference is what we’ll want then.
The mere knowledge and awareness of this bias is the solution to not falling victim to it. In order to make better decisions, we must understand and appreciate the temperament that we’re currently operating from.
In life, better decisions are made from simply being aware that these biases exist that have the potential of impacting your sense of judgement. These biases make you take impulsive decisions based on assumptions and conformity rather than making well informed decisions based on research and reality.