Samantha Lee and Shana Lebowitz contributed an article to the Business Insider, entitled “20 cognitive biases that screw up your decisions.” You may wonder if you have made any decisions that may be included in their thesis.”
Before we dive in, it will be helpful to agree on at least one definition of cognitive or cognition. Cognition in the 15th century, meant “thinking and awareness.” Aristotle focused on cognitive areas pertaining to memory, perception, and mental imagery. He exercised great care to ensure that his studies were based on empirical evidence and scientific information that was assembled with thorough observation and careful experiments.
Lee and Lebowitz suggest that we may believe that the many decisions that we make on a daily basis are rational, but are they really? Some of the many decisions that we make are as simple as the decision to ignore important information, what to eat, when to make a career move or being over-confident in our abilities.
Here is a list of their top three (3) cognitive biases, but you should review their illustration that displays the 20 biases and read the original article here.
- Anchoring Bias – Over-reliance on the first bit of information that becomes available. During decision-making, anchoring occurs when individuals use an initial piece of information to make subsequent judgments. Once an anchor is set, other judgments are made by adjusting away from that anchor, and there is a bias toward interpreting other information around the anchor. For example, the initial price offered for a used car sets the standard for the rest of the negotiations, so that prices lower than the initial price seem more reasonable even if they are still higher than what the car is really worth.
- Availability Heuristics – Over-valuing the information that is available to you, without regard for information that is not available to you. Heuristics are simple, efficient rules which people often use to form judgments and make decisions. They tend to focus on one aspect of a complex problem and ignoring others. The resulting errors are called “cognitive biases.” These biases have affected choices valuing a house, deciding the outcome of a legal case, or making investment decisions.
- The Bandwagon Effect – The number of people who hold a particular belief influences others to adopt that same belief. This is a phenomenon where the rate of uptake of beliefs, ideas, fads, and trends increases the more that they have already been adopted by others. In other words, the bandwagon effect is characterized by the probability of individual adoption increasing with respect to the proportion who have already done so. The tendency to follow the actions or beliefs of others can occur because individuals directly prefer to conform, or because individuals derive information from others. The bandwagon effect explains why there are fashion trends.
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