Here are 10 common biases that can hinder your judgement

On average, we make more than 20,000 decisions every single day, most of them routinely based on experience and intuition. But when business solutions are required, these automatisms can often become a hindrance.

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Cognitive biases are often disruptive factors when it comes to making the most objective conclusions possible. There are ten biases that you should be aware of that can impair your decision-making ability and this is why it is so important for companies to optimize human judgment with Decision Intelligence.

1. Action Bias

Why we prefer to act rather than do nothing

Definition

The tendency to take action automatically and by default, even when there are no valid arguments for doing so, is called Action Bias.

Background

“No pain, no gain” and “Idleness is the beginning of all vices”. It is believed that the tendency to keep busy has accompanied us since the days of being hunter-gatherers. We maintain this instinct via learning patterns throughout our lives, regardless of whether action is the best solution or not in individual cases.

Strategy

Doing nothing instead of taking action does not mean that you are giving up – it can often be more productive not to intervene. To prevent action from becoming your default response, it is better for you to suppress the compulsion to immediately do something.

2. Heuristic Effect

Why we rely on our feelings to make quick decisions

Definition

Relying on our feelings rather than considering and analyzing all accurate information available when making decisions can help us to reach a conclusion quickly and easily.

Background

It is not unusual for humans to be unable to obtain and evaluate all necessary (and available) information so we find it easier to take shortcuts to make decisions. We can allow ourselves to be guided by moods and feelings rather than known judgment strategies.

Strategy

A decision that is fraught with positive or negative feelings should be postponed until your emotional state has settled. Taking time to think logically about choices to be made and consideration of all possible options allows decision-makers to prevent using emotional shortcuts.

3. Ambiguity Effect

Why we prefer options we are familiar with

Definition

Humans tend to avoid options that have too many uncertainty factors when making decisions.

Background

Decision-makers usually prefer options about which they feel knowledgeable rather than options that leave too much to informed guesswork. When confronted with ambiguity, it is common for decision-makers to imagine the worst-case scenario whilst overlooking the fact that the outcome could just as likely be the best-case scenario.

Strategy

The Ambiguity Effect can be a powerful tool for making quick decisions. However, decision-makers should overcome their first impulse to avoid ambiguous options and situations in order to exploit the full possibilities for their business goals.

4. Attentional Bias

Why we focus on certain things more than others

Definition

Humans tend to focus on certain aspects while ignoring others. Attention is very often influenced by external stimuli (perceived threat) and internal states (hunger, sadness, etc.).

Background

In prehistoric times, the one-sided focus of attention had evolutionary advantages that ensured survival. Although foraging for food and defending our lives are no longer the primary focus for most people in everyday life, our brains still function according to this pattern.

Strategy

It is difficult to completely avoid attentional bias. Its impact on the thought process is at such a deep, automatic level that people are not usually aware of it. Nevertheless, those who actively reflect on such stimuli and states can at least postpone critical decision-making.

5. Heuristic Representativeness

Why we look for similarities to measure statistical probability

Definition

When trying to estimate how likely a certain event is, people often use similarities with known categories or prototypes as a guide.

Background

The human ability to understand the world and remember things is based on categorization. Without categories, every time we encounter something new we would have to learn from scratch what it is and how it works.

Strategy

Because categorization is so fundamental to how we perceive the world,

Heuristic Representativeness cannot be completely avoided. But those who are aware that they are using entrenched patterns and stereotypes will find it easier to correct their judgments. Feedback within the team can help to avoid bias.

6. Bounded Rationality

Why we settle for “good enough”

Definition

Bounded Rationality is a human decision-making method that leaves us feeling satisfied rather than achieve optimal outcomes. In other words, we seek a decision that is makes us feel good and will do for now, rather than take the logical and best possible decision.

Background

During decision-making, behavior is rational when a course of action is chosen that yields the greatest benefit to the deciding individual or organization. However, when our brain capacity, time and available information are limited, we usually have to make decisions by using shortcuts. Bounded Rationality causes us to make satisfactory decisions, but that does not mean that those decisions are optimal.

Strategy

Being aware of Bounded Rationality does not help us to overcome it because knowing the limits of reasoning does not make them disappear. Decision-making within teams helps, but a comprehensive evaluation of all information within a short time is only possible by using Artificial Intelligence.

7. Commitment Bias

Why people hold on to existing ideas even when they have evidence that those ideas are not correct

Definition

Humans tend to hold on to past behaviors even when they do not lead to the desired results or they even turn out to be wrong.

Background

It is human nature to constantly convince ourselves and those around us that we are rational decision-makers. We think we gain more credibility by keeping our actions consistent – and defend our behavior and decisions to others to save face.

Strategy

Consistency is not the be-all and end-all. When decision-makers realize that certain past judgments no longer align with current goals or values, there is no reason to stick with them. In fact, it is irrational to make decisions solely because of a desire for consistency or a fear of change.

8. Decision Fatigue

Why we make the worst decisions at the end of the day

Definition

Our ability to make decisions deteriorates when our cognitive abilities are depleted. Decision fatigue is the reason why employees feel overwhelmed when they have had too many decisions to make.

Background

Making decisions is a highly complex cognitive process. Too many decisions, too many choices or decision processes that are too long tire the mind and lead to decision fatigue and this leads to irrational and impulsive decisions being made.

Strategy

Having routines in your daily life ensures that you will have to make fewer decisions overall during the day. Blood sugar levels are a major factor in making wise decisions so to keep it constant people should eat small snacks or make decisions only after eating. In addition, rest breaks and downtime help prevent decision fatigue.

9. Naïve Realism

Why we believe we have an objective picture of the world

Definition

Naïve Realism describes our assumption that we perceive the world exactly as it is, unaffected by our emotions, experiences, cultural identity, etc.

Background

We all have a cognitive bias in the way we view things. We look at the world through an egocentric lens and can have difficulty separating our own beliefs from the beliefs of others. This bias for a false consensus causes team members and managers to assume that other people have the same opinion as they do and that their opinion is, therefore, more in line with the facts.

Strategy

Awareness of Naïve Realism can help avoid its effects. Those who gain the insight in collaboration that their perception of things is subjective and can be distorted by bias can begin to reduce this egocentrism.

10. Empathy Gap

Why we so often fail to properly assess how much our emotions influence our behavior

Definition

We as humans tend to underestimate the influence of different mental states, emotions and feelings on our own judgment.

Background

People who are in a particular mental state (e.g., happy or angry) can have difficulty in taking on other perspectives. They are unable to empathize with, or predict the actions of, a person who is in a different mental state. This makes it difficult for us to make adequate decisions.

Strategy

The Empathy Gap hinders compromise: somebody who wants to get their point across can find it difficult to put themselves in the shoes of someone else who is willing to come to a satisfactory agreement all around – and vice versa. Customer understanding can also be effected by this bias. One technique companies can use to make better predictions is to take into account not only future actions, but also divergent mental states.

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