Decision Making Cognitive Biases are persistent, biased patterns of thinking or decision making that lead to “irrational” decisions. Decision biases affect our ability to make rational decisions. These biases can have material impacts on behaviors and decisions in the world of work.

Summary by The World of Work Project

Decision, Belief and Behavior Biases

Decision making cognitive biases and, belief and behavior biases are a sub-set of cognitive biases. Other subsets we consider include social biases and memory biases.

Decision biases are considered to be persistent patterns of irrationality that can materially affect an individual’s decision making process.

They affect a wide range of aspects of life from planning and strategy at work to consumption or social interaction choices in our personal lives. There are many more biases than we cover here, but this is a useful starter.

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Anchors hold ships in a specific area, and anchoring holds our thoughts or decisions in a specific area.

Anchoring

Anchoring is one of the most well know of Decision making cognitive biases.

When making decisions we often anchor our thinking on one specific piece of information at the expense of others.

We usually anchor on one of the first pieces of information we receive.

For example, shops may place expensive items near the entrance so you anchor your expectations on them. Their more cheaply priced items then appear to be bargains, so you buy them.

Belief Bias

If we believe in a solution, then we mentally work back and believe more in the arguments that support that solution than those that don’t (even if they are flawed).

Choice-supportive Bias

We remember the decisions we’ve made in the past as better than they actually were.

This is one of several decision making cognitive biases that help us feel better about ourselves. In our view, some of these biases help us manage our egos and psychology in the world.

Confirmation Bias

We unconsciously search for information that supports and validates our views and beliefs, and rate such information more highly than information that contradicts our beliefs.

Courtesy Bias

We give opinions that are more socially correct than our true opinions so that we maintain social harmony. This is one of the nicer decision making cognitive biases.

Sometimes courtesy trumps truth.

Dunning-Kruger Effect

Unskilled or ineffective people over-estimate how good they are at things, while skilled and effective people underestimate how good they are at things.

Endowment Effect

We value things we own more than identical objects that we don’t own. For example, we’ll often need to be paid more than something’s replacement cost to part with it. One in the hand is worth more than two in the bush, and all of that.

Framing Effect

We reach different decisions based on exactly the same information, when that information is provided in different ways.

It’s been black three times now, it MUST be red next!

Gambler’s Fallacy

We tend to think that the probability of future events are altered by the outcomes of past events.

This is one of those decision making cognitive biases that appears in many areas. For example in sports people think that players can get a “hot hand”, though statistically they don’t really do so.

Hyperbolic Discounting

We weight outcomes in the present much more than outcomes in the future. This is “irrational”, but perhaps quite rational in some other ways.

IKEA Effect

We consider things that we have created ourselves to be more valuable than things created by others.

Illusory Truth Effect

The illusory truth effect is a decision making cognitive bias that relates to what we believe.

We believe statements that are easier to believe, or that we’ve heard a lot, regardless of whether they are actually true.

Loss Aversion

We experience more negativity when we lose something that we gain positivity when we obtain the same thing. Losing is more painful than gaining is pleasurable.

Mere Exposure Effect

We unduly like things more, the more we have been exposed to them, regardless of our true engagement and understanding of them.

This is one of the decision making cognitive biases that’s probably had the largest effect on our lives and cities.

Brand awareness is powerful wherever you are.

Not Invented Here

We avoid or dislike things that have not been created by ourselves or our teams.

Outcome Bias

We judge the quality of decisions based on ultimate outcomes, not on the objective quality of the decision at the point in time it was made.

Planning Fallacy

Most projects finish late, even if they’re chasing innovation.

We tend to consistently underestimate how long it will take to complete tasks.

Pro-innovation Bias

We are excessively optimistic towards novelty and innovation, underestimating limitations and weaknesses. Sometimes old things, process and ways of doing things are pretty good.

You might enjoy reading up on initial and incremental innovation, cultures for innovation, the Medici effect and the Innovator’s Dilemma.

Rhyme as Reason

Rhyme or reason is another decision making cognitive bias that relates to what we believe.

We believe statements that rhyme more than statements of the same content which do not rhyme.

Selective Perception

Our expectations about a situation or event affect our perception of a situation or event.

Social Comparison Bias

We generally favor candidates who do not compete with our own skill sets when we recruit.

Status-quo Bias

We generally prefer things to stay the same as opposed to change.

Stereotyping

We expect an individual to fit within our interpretation of a group, without any information about the specific individual.

Survivor Bias

We place more weight and significance on individuals, objects or organizations that survive a process, situation or event than those who do not. For example, because we’re surrounded by successful businesses, we think that most businesses are successful, failing to consider all of those that have not survived.

This dandelion is surviving and doing well, so it must be easy for plants to grow here…

Subjective Validation

We are more likely to believe a specific event to be true if the event fits with our overarching beliefs than if it doesn’t. Similarly, we will find correlations that support our beliefs more often than we find correlations that do not.

Learning More

The way we think as humans is fascinating. As well as understanding more types of cognitive bias it’s worth looking into our Dual Process way of thinking. These biases and our “irrationality” means that we’re all suggestible and susceptible to nudging and the powers of choice architecture and persuasion.

Communication is another tool often used to change people’s behaviors. Ideas like the rhetorical triangle and the five canons of rhetoric shed some light on how this works. For a more detailed look at communicating for persuasion, explore Monroe’s Motivated Sequence.

Increasingly, products are also design to be persuasive, as it were. They are designed to create habits and drive increased use. Examples of this include Fogg’s model and the Hook model of behavioral design.

You can listen to our podcast, below, on nudging to learn more about how our behaviors can be influenced:

The World of Work Project View

We think that cognitive biases are fascinating and important. Decision biases clearly lead us as individuals and leaders to make irrational decisions, which can lead to negative outcomes for ourselves and those around us.

Learning about our decision biases can help us make better (or at least more rational) decisions. It isn’t easy to think and manage ourselves away from having these biases so, which is why data and data based decisions are so important, particularly for organizations.

Our Podcast

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Kahneman, D. (2011). Thinking, fast and slow. New York: Farrar, Straus and Giroux. Ariely, Dan. Predictably Irrational: The Hidden Forces That Shape Our Decisions. New York : Harper, 2009. Print.

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