Cognitive Bias in a Decision Making
Cognitive Biases are general rules programmed in our brain of that how we should feel and react on different events.
Every person creates it’s own reality from the perception of given information. And cognitive biases may provide an answer of how individual would behave in particular situation.
Since cognitive biases may lead to misperception of information or illogical decisions, it is interesting to know them.
Avoiding Psychological Bias in Decision Making:
- Ambiguity Effect: It is a tendency to choose options with known probability and avoid options for which probability seem unknown or "ambiguous".
A great example is how we invest money. We usually put our money into bank deposits instead of investing in stocks or funds, where the outcome is unknown. Even though the funds bring a higher outcome in average.
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Anchoring Bias : It is a tendency to rely on the first piece of information "anchor" when taking decision.
This effect is commonly used in shops. For example, price 19,85$ is seemed much lower than 20,00$. However, difference is only 0,15$ or 1%. People focus their attention on the amount of dollars first, so 19,85$ is associated rather with 19,00$ than with 20,00$.
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Anthropomorphism : It is a tendency to characterize with human traits and emotions non-human objects.
For example, when it is heavy rain, someone of us asking it to stop. Another example is how people attribute human emotions to their pets.
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Attentional Bias : It is a tendency for people to pay more attention on the things they are thinking about most.
For example, If you like to wear new clothes and you think about it, you will pay more attention on the clothes of others.
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Automation Bias: It is a tendency to over-rely on automation.
Every automated system has it’s own level of accuracy. For example, "You are working as a security guard at the object and you hear a strange sound. However, automated system do not spot any violations. So, you rely on your systems and do not check situation by yourself." As the result of automation bias you didn’t check object and robber may got into the object.
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Availability Heuristic : It is a tendency to estimate the probability of phenomena higher, depending on how recent our memories are.
People overestimate the probability of happening disaster when it recently happened. For example, the percentage of people who decided to purchase house insurance after the earthquake was over 70% after the disaster. However, 10 years later this percentage reduced down to 30%.
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Backfire Effect: It is a situation when given evidence against someone’s beliefs can be rejected by him and his belief will only strengthen.
For example, "Your neighbor bought a car. You noticed that there is a small scratch on the door. Your neighbor claimed that it is so small that no-one will notice and have become valuing his car more." However, the objective value remains the same.
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Bandwagon Effect: It is a tendency to do things because others do these things.
This effect is a kind of a group think behavior. For example, suddenly everyone in school came in class in uniform except one. The next day this schoolchild will come in uniform, because everyone is in uniform. But if no-one wears uniform, that wouldn't happened without external action.
- Base Rate Neglect :
It is a tendency to ignore general information and focus attention on a specific part.
"In general, 1% of people are HIV+. HIV tests are correct in 99% of cases. So, If a patient tested positive what is a probability that he really has a disease?" The answer is not 99%. It is 50% chance of being HIV+.
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Belief Bias:
It is a tendency to judge arguments focusing on the conclusion.
People tend to judge a performance or an essay depending on a conclusion by 80%. In this way, conclusion supports the arguments, but not the reverse. So, it is true that the most crucial part of every job is how the concluding part presented.
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Better Than Average:
It is a tendency to consider yourself as better at something than average person.
For example, 80% of drivers (depends on the country) think that they are a better driver than average.
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Blind Spot Bias:
It is a tendency to consider yourself as less biased than other people.
Also, it is an ability to recognize more biases in others behavior than in yourself. However, knowledge of biases does not make you less biased.
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Cheerleader Effect:
It is a tendency to think that people in group are more attractive than individuals.
One study shown that participants rate attractiveness of faces on the group photos higher than single photos of the same persons.
- Ambiguity Effect: It is a tendency to choose options with known probability and avoid options for which probability seem unknown or "ambiguous".A great example is how we invest money. We usually put our money into bank deposits instead of investing in stocks or funds, where the outcome is unknown. Even though the funds bring a higher outcome in average.
- Anchoring Bias : It is a tendency to rely on the first piece of information "anchor" when taking decision.This effect is commonly used in shops. For example, price 19,85$ is seemed much lower than 20,00$. However, difference is only 0,15$ or 1%. People focus their attention on the amount of dollars first, so 19,85$ is associated rather with 19,00$ than with 20,00$.
- Anthropomorphism : It is a tendency to characterize with human traits and emotions non-human objects.For example, when it is heavy rain, someone of us asking it to stop. Another example is how people attribute human emotions to their pets.
- Attentional Bias : It is a tendency for people to pay more attention on the things they are thinking about most.For example, If you like to wear new clothes and you think about it, you will pay more attention on the clothes of others.
- Automation Bias: It is a tendency to over-rely on automation.Every automated system has it’s own level of accuracy. For example, "You are working as a security guard at the object and you hear a strange sound. However, automated system do not spot any violations. So, you rely on your systems and do not check situation by yourself." As the result of automation bias you didn’t check object and robber may got into the object.
- Availability Heuristic : It is a tendency to estimate the probability of phenomena higher, depending on how recent our memories are.People overestimate the probability of happening disaster when it recently happened. For example, the percentage of people who decided to purchase house insurance after the earthquake was over 70% after the disaster. However, 10 years later this percentage reduced down to 30%.
- Backfire Effect: It is a situation when given evidence against someone’s beliefs can be rejected by him and his belief will only strengthen.For example, "Your neighbor bought a car. You noticed that there is a small scratch on the door. Your neighbor claimed that it is so small that no-one will notice and have become valuing his car more." However, the objective value remains the same.
- Bandwagon Effect: It is a tendency to do things because others do these things.This effect is a kind of a group think behavior. For example, suddenly everyone in school came in class in uniform except one. The next day this schoolchild will come in uniform, because everyone is in uniform. But if no-one wears uniform, that wouldn't happened without external action.
- Base Rate Neglect : It is a tendency to ignore general information and focus attention on a specific part."In general, 1% of people are HIV+. HIV tests are correct in 99% of cases. So, If a patient tested positive what is a probability that he really has a disease?" The answer is not 99%. It is 50% chance of being HIV+.
- Belief Bias:It is a tendency to judge arguments focusing on the conclusion.People tend to judge a performance or an essay depending on a conclusion by 80%. In this way, conclusion supports the arguments, but not the reverse. So, it is true that the most crucial part of every job is how the concluding part presented.
- Better Than Average:It is a tendency to consider yourself as better at something than average person.For example, 80% of drivers (depends on the country) think that they are a better driver than average.
- Blind Spot Bias:It is a tendency to consider yourself as less biased than other people.Also, it is an ability to recognize more biases in others behavior than in yourself. However, knowledge of biases does not make you less biased.
- Cheerleader Effect:It is a tendency to think that people in group are more attractive than individuals.One study shown that participants rate attractiveness of faces on the group photos higher than single photos of the same persons.
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