9 cognitive biases that can derail your thinking
Ever wonder what leads people to make the decisions they make? Not the trivial decisions, such as what toothpaste to buy or what to have for lunch. (Marketers can perseverate over those types of decisions.) But the life-altering, critical decisions, such as whether to get a COVID vaccine or winterize power plants ahead of a winter storm.
Because more and more of us now live with the consequences of other people’s catastrophically bad decision making, I’ve been wondering what leads seemingly smart, well-meaning people to make such colossal mistakes in judgement.
If you’ve ever wondered the same thing . . . keep reading. This post examines common cognitive biases that can lead people to make bad decisions. Definitions from behavioral economics.com and Verywell mind.
“While people like to believe that they are rational and logical, the fact is that people are continually under the influence of cognitive biases. These biases distort thinking, influence beliefs, and sway the decisions and judgments that people make each and every day,” writes Kendra Cherry.
Biases often occur because of problems with memory, attention, attribution, and other mental mistakes. Everyone has cognitive biases and some are easier to spot than others.
1. Anchoring bias — people are often overly influenced by the first piece of information they learn about a topic.
2. Dunning-Kruger effect — the belief that you are smarter and more capable than you really are.
3. Endowment effect — over-valuing something that you own regardless of its objective market value. People often place a greater value on things once they have established ownership, most likely because of the object’s symbolic or emotional significance.
4. False consensus effect —overestimating how much other people agree with you.
5. Hindsight bias — when an event occurs people generally overestimate the extent to which they could have predicted it.
6. Prospect theory — when faced with uncertainty, people are motivated more by losses than by gains. As a result, they devote more energy to avoiding loss than to achieving gain.
7. Self-serving bias — blaming external forces when bad things happen and giving yourself credit when good things happen.
8. Status quo bias — people are willing to take a bigger gamble to maintain the status quo than they would be to acquire it in the first place. People often feel more regret for bad outcomes that result from new actions taken than for bad outcomes that are the result of inaction.
9. Sunk cost fallacy — continuing a behavior or task because you have already invested resources (time, money, effort) in it, often going against evidence that shows it is no longer the best decision.
How can you overcome cognitive biases? Psychologists say a good place to start is to ask what factors are influencing your decisions? If you notice that any of the above factors are influencing you, challenge your biases and think about your thought process.
