Even the most rational of us make incorrect decisions when faced with particular situations. Here are few common cognitive biases that we all are prone to. But, being aware of them can help us to avoid them. good luck :-).
Confirmation bias – Seeking information that confirms what we already believe. Often, we also overlook evidence that disproves or at least doesn’t prove our beliefs.
Reactance – When faced with evidence that contradicts what we “know” to be true, we tend to criticize and denounce the opposing information before investigating the veracity of the new information.
Gamblers bias – Placing too much stock in past events. For instance if you flip a coin ten times and all ten times it comes up heads, what is the likelihood that the next flip of the coin will be heads also? Answer – 50%.
Group think – Because group harmony is highly regarded it can be easy for everyone in the group to agree with the common consensus even when better solutions may be available. This may also manifest itself in the following manner; when one person in a group is convinced that a decision should go in a certain direction, but chooses to not to express this point of view because it would contradict what the rest of the group thinks.
Bandwagon bias – This is a type of group think. Fads and trends thrive on this. When “everyone” else like, believes it or is doing it, then it must be good. Right? Not necessarily. Just because an item is the most sold of its kind does not mean it is the best for you. Do your own research.
Sunken cost bias – When we have invested a lot of time and/or money in a project that is obviously doomed to fail we may deny (or perhaps discount) the evidence and continue with our plans anyway.
Framing effect – Which is correct?
- The government’s war on drugs has been a tremendous success. In the last 10 years we have seen a nearly 10% reduction in drug overdoses.
- Evidence indicates that the government’s war on drugs has had little effect. In the span of the last 10 years there has only been a 9.8% decrease in overdoses.
They are both correct with reference to the statistics, yet leave the reader with two different interpretations of what has been accomplished (or not).
Anchoring effect – We meet this bias quite often in a negotiation situation. For instance, consider this scenario; you are at a used car dealership that has no prices listed on its cars. You have your eye on that, hot little Ferrari or VW bug depending on your tastes. You’re not sure what you’d like to pay for the car, but when the saleswoman offers her, “special deal price”, it creates and anchors price that becomes the price at which negotiation starts.