Whilst smart people are able to make quick decisions and give quick opinions, one vital aspect of wisdom is to avoid being caught out by these thinking traps, and see through to the truth underneath. Let’s examine six of these biases.
1. The Anchoring Bias
The anchoring bias predisposes us to make inferences based on some earlier information we had – even if that information has little or no relevance. So imagine how powerful this effect is if there is some relevance. This accounts for the “first speaker effect” at meetings, where the argument that the first speaker makes in a discussion carries disproportionate weight. A wise facilitator will start with examining objective information and ensure that powerful advocacy comes later in a discussion.
Always examine all of the evidence before you start to draw conclusions.
2. Representativeness Bias
We like patterns, and if we can see a way that something can fit into a convenient category, or conform to a story line, we are likely to give that interpretation more credit than the evidence merits. This is one of the reasons conspiracy theories persist – they create a compelling narrative that fits our prejudices.
Investigation and statistics provide better evidence than anecdote and expectation.
3. Availability Bias
Recent events bias our perception of risk, because they are more available to our intuition than counter examples. Consequently, we fear knife crime more after a recent incident, and avoid trains after an accident. One event does not change the statistics significantly, and may be no indicator of a systematic change, yet it weighs heavily on our perceptions. Likewise, anecdotal evidence is very weak because it often focuses on a few dramatic examples, rather than the vast number of counter examples that make for a poor story to tell.
Always evaluate recent events for systematic patterns of change. If there are none, discount them from your thinking when considering likely future scenarios.
4. Affect Bias
The emotional impact of a potential threat contaminates our assessment of that threat, leading us to fear it more than we should. Dread diseases and nuclear accidents are extremely rare (nuclear is the safest mass energy production technology by any measure) but our perception of their severe impact makes them seem more likely. “Affect” means our emotional response.
Separate probability from severity and examine them separately.
5. The Sunk-cost Bias
Once we have made an investment – of time, money or reputation – in an idea, we are loath to give it up. That investment makes us feel it is important to continue, long after its ultimate value has been shown to be diminished or even wipe out. This is why failing projects are rarely cancelled – even though they can no longer deliver benefit.
Evaluate the cost to completion and compare with the value at completion – this is the true measure of whether to continue.
6. Precision Bias
One of the biggest culprits for failed businesses and projects going wrong is the trap we fall into because precision seems like a good thing. We mistake the precision of our calculations and the detail of our plans for accuracy and we place too much faith in them. This blinds us to the faulty assumption on line 1 or the erroneous formula at line 385. This is linked to the seduction we feel towards beautifully presented information, which we then receive less critically than equally good or poor information, presented in a rough and ready way. PowerPoint presentations are responsible for many bad decisions.
The “back of an envelope” is a powerful tool for checking your calculations and plans.
