Chapter 20: Cognitive Biases

 

Chapter 20: COGNITIVE BIASES

•   Cognitive biases are systematic patterns of deviation from rationality or good judgment that can occur in our thinking or decision-making processes. These biases can affect our perception, interpretation, and memory of information, and can lead to errors or distortions in our reasoning.

•   There are many different types of cognitive biases, including confirmation bias (the tendency to seek out or interpret information in a way that confirms our pre-existing beliefs), anchoring bias (the tendency to rely too heavily on the first piece of information encountered when making decisions), availability bias (the tendency to give greater weight to more recent or easily recalled information), and many others.

•   These biases can be both conscious and unconscious and can impact our behaviours and decision-making in a variety of contexts, including personal, professional, and societal settings. Being aware of these biases and actively working to mitigate their effects can help us make more informed and rational decisions.

1.      MEMORY BIASES

•     Memory biases refer to the tendency for our memories to be influenced by cognitive biases. These biases can affect how we remember events, information, and experiences, and can lead to inaccuracies or distortions in our recollection.

•     Information that is more vivid, recent, and easier to recall can bias our reasoning. Take this question as an example:
Which is more likely in your country: death from lung cancer or a traffic accident?

•     Many people think they are more likely to die from a traffic accident than from lung cancer, but this is not true in most developed countries. It is easy to get it wrong because traffic accidents are more vivid and are mentioned more often in news. Similarly, many people mistakenly believe that there are more English words that begin with k than words having k as the third letter, probably because it is easier to think of words that begin with k. These are cases of availability bias, by which people estimate frequency and probability based on how easy it is to recall an example. Vivid and recent events are easier to recall, but the problem is that they might not be the most frequent or representative ones. Here are some related cases:

•     People think emotional or dramatic events are more likely. Most people overestimate the chance of being attacked by sharks while swimming, or they believe (mistakenly) that ground transport is safer than flying.

•     Imagining an outcome makes us think it is more likely to happen. In one famous study, people were more likely to think a candidate would win an election when they had been asked to imagine that candidate winning. The converse of this finding is that many people refuse to believe things they find painful or unpleasant to imagine. This is a form of denial—for example, some parents refuse to accept that their children abuse drugs even when there is plenty of evidence.

•     Recent experiences have a greater impact than earlier ones.This is known as the recency effect. This is perhaps one reason why many lawyers present their most important witnesses near the end of the trial. 

•     People respond more positively to familiar things. The exposure effect is that we often prefer faces, sounds and words we have encountered more frequently. 

2.      CONTEXT BIAS

•    Context bias refers to the influence that the surrounding context or situation can have on a person's judgment or decision-making process. This bias occurs when individuals are swayed by the environment or setting in which they find themselves, rather than relying solely on the facts or evidence at hand.

•    Context bias can manifest in various ways. For example, it may cause a person to give more weight to certain pieces of information over others because of how it fits into their pre-existing beliefs or values. Alternatively, it may lead individuals to make assumptions based on their surroundings, rather than examining the available evidence in a more objective manner.

(i)     Presentation Effects

•    Consider the following statement: Eritrea is an African country. Do you think its population is above or below 50 million? Estimate its current population. Just guess how many people there might be, even if you do not know the country well. 

•    What is interesting about the above question is that the 50 million figure in the question has a big influence on the answers that people come up with. Typical guesses might be between 30 and 100 million. Now ask your friends the same question, but replace the 50 million with the more accurate estimate of 5 million. The average answer is likely to be much smaller. However, surely the question does not imply in any way that the number mentioned is close to the correct answer. This is an illustration of anchoring, where we arrive at our judgments by making minor adjustments to some arbitrary reference point given to us (the anchor). We can therefore manipulate judgments by changing the reference point. 

•    In a vivid demonstration of the anchoring effect, MIT professor Dan Ariely asked his students to write down the last two digits of their Social Security number (a form of identity in the United States). The students then bid on items such as wine and chocolates in an auction. It turns out that those who wrote down a higher number are more willing to offer a higher bid, sometimes by almost 100 per cent. Clearly their perception of what counts as a fair price had been unconsciously biased by some completely irrelevant information. 

•    In sales and marketing, the anchoring effect can be used to influence consumers. Some researchers asked real estate agents to inspect a house and estimate its value. Earlier, some agents were given a higher list price, some a lower one. The list price is the anchor that affected the agents' estimates, even though the agents were supposed to be experts. On average, those who saw the higher list price gave a higher estimate. When asked, they also denied having taken the list price into account. Instead, they would cite features of the property to justify their estimates (Northcraft and Neale, 1987). 

•    Here are more examples of how context affects our decisions without our conscious awareness: 

•    Subjects who are told that wine is expensive are likely to find it more pleasant. They often like it better than an identical wine that is labelled as cheaper! 

•    The purported origin of wine affects not just its perceived quality but also the perceived quality of the food served with the wine. In one study, two groups of restaurant customers were given the same free wine. One group was told that the wine was from South Dakota. The other group was told that it was from California, which is more famous for wine. As expected, the California group rated the wine higher. But these customers also liked the food better, ate 11% more food, and were more likely to come back again. 

•    People judge instructions to be easier to follow when they are printed using a font easier on the eyes. In one study, subjects estimated it would take 8 minutes to complete a set of exercise instructions printed using an easy-to-read Arial font. But those in another group who read the same instructions in a difficult-to-read font thought it would take a full 15 minutes (Song and Schwarz, 2008). 

•    Many studies link the pronunciation of names to risk assessment. When subjects were given completely fictitious names of food additives, those that were easier to pronounce (magnalroxate) were regarded as less harmful than ones which are harder to pronounce (hnegripitrom). Meanwhile, amusement park rides with names that are difficult to pronounce (tsiischili) were considered to be more exciting and sickness-inducing than rides with easy-to-pronounce names (chunta). These results are obviously relevant to marketing and advertising. 

•    The use of agent metaphors affects how people predict the stock market. If the stock market is described using words that apply to living things rather than inanimate objects, people expect the stock market to follow the trend suggested by those words. So if a stock is said to have “jumped,” “fought its way upward,” or “climbed up,” people are more likely to think it will continue to move up. In contrast, merely saying that the stock has “increased” has no such effect.

(ii)   Framing

•    The framing effect is a well-established cognitive bias. It is about how the formulation of a problem (frame) can affect decision-making. In particular, people value avoiding losses over acquiring gains, so much so that we might feel differently about the same choice depending on whether it is described in terms of loss avoidance or gain. Suppose a patient is deciding whether to undergo surgery to treat a serious illness. If she is told there is a 10% chance of dying from the operation, she is less likely to agree to surgery than when being told the operation has a 90% survival rate. But the two descriptions are of course equivalent since dying means not surviving.

•    One recent study suggests that the fear of loss is a more powerful motivator than the prospect of gain. Workers who are told they have already received a bonus will work harder to avoid the bonus being taken away, compared to others who are told they will receive a bonus later if they work hard. 

How smell affects the mind 

It should come as no surprise that our senses affect our emotions and judgments, but recent research has discovered some rather surprising linkages. In regard to smell, a clean smell seems to promote kindness and cooperation. In one experiment, subjects in a room sprayed with citrus-scented cleaning liquid were more likely to reciprocate the trust and were more interested in volunteering for charity work. In other experiments, the smells of perfume and coffee made people more likely to help strangers. Some researchers have studied the effects of smell on shopping behaviour. In one study, men and women stayed longer in a shop and spent more money when the shop was scented with a fragrance specific to their gender. So watch out when you go shopping! 

3.      EVIDENTIAL FAILURES

•    Let's look at cognitive biases in which people fail to use information and evidence correctly. Confirmation bias is very persistent and well-documented. It is the tendency to interpret the world to fit our existing beliefs, ignoring or neglecting counter-evidence. Sometimes this can be somewhat deliberate. When we quarrel with our friends, we might recall their past mistakes vividly but are reluctant to acknowledge our own. Confirmation bias can also operate unconsciously outside of emotionally charged situations. When people test their beliefs, they are usually more interested in looking for supporting evidence, and they do not spend enough time searching for opposing information and counterexamples. This is the myside bias.

•    For example, students who write essays defending a claim they already accept typically present only supporting reasons, paying little attention to potential objections. The myside bias is perhaps one reason why people retain superstitious beliefs. If a person believes that Friday the 13th is an unlucky day, that person is more likely to notice accidents happening on that day. But he might pay less attention when that day passes by and nothing bad has happened. This selective attention to evidence makes it more difficult to give up unwarranted beliefs. We end up being more confident of our own beliefs than we should be. 

•    The belief perseverance effect is the phenomenon that once we believe something, we often keep on believing it even when faced with contrary evidence. In one experiment, subjects were asked to read suicide notes to see which of them were real. Some of the subjects were told they were very good at detecting real suicide notes. Others were told they were not very accurate. They were then informed that they had been lied to and that the information about their accuracy was fake. The subjects were then asked to guess what their actual performance was. It turns out that those who were told they were highly accurate would still rate themselves higher than those who were told they were inaccurate. 

4.      EGO BIASES

•    Ego biases concern our self-perception and how we see others in relation to ourselves. They include attempts to distort reality to protect our ego or self-esteem. A familiar example is rationalisation, using false excuses to justify our actions. When a speculator profits from a rising stock market he might attribute his success to his investment skills. But when he loses the money he might blame it on bad luck or market manipulation. And when his short-term gamble does not pay off, he avoids blaming himself by saying that he invests for the long term. Some examples: 

•   More than 50% of drivers think they drive better and safer than average 

•   Business managers usually regard themselves as more capable than typical managers. 

•   Most students consider themselves to be more popular than average. 

•   In a spelling test, subjects who think they are 100% certain of their answers are correct only 80% of the time.

•   People generally rate themselves as more objective than average, and as being less susceptible to biases than their peers. 

•    Power seems to affect our judgments as well. An intriguing recent experiment indicates that power induces moral hypocrisy in the form of double standards. When people have power and think they are entitled to it, they are harsher when it comes to judging other people's moral lapses, but they are more willing to let themselves off when they do the same thing. One might wonder about the implications for politicians and managers. 

5.      COMBATING COGNITIVE BIASES

•    It would of course be nice if we could minimise their effects on us. But since most of them affect our judgments without our conscious awareness, this is not easy to do. Here are some concrete ways to fight back. 

•    Enhance your awareness: Learn more about when cognitivebiases happen and how to lessen their impact. 

•    Think harder: Think more carefully and systematically. For example: 

•    Avoid framing biases by adopting different perspectives. Formulate a question or problem in different ways. Think about how other people would response. 

•    Actively consider contrary evidence and unpopular alternatives. Think about both pros and cons. Talk to people who disagree with you.      

•    Be systematic. Use reliable methods and data where possible, such as using information about statistics and probability or adopting a reliable framework for thinking about a problem. 

•    Plan ahead and allow enough time to understand a problem. Avoid hasty decisions.

•    Use feedback and experience: Record the reasons for your decisions so you can understand why you succeed or fail later on, and use the information to improve yourself. Learn from role models.

•    If you can't beat them, join them: We can turn cognitive biases to our ad- 
vantage by exploiting weaknesses in others. Many cognitive biases have 
obvious implications for marketing, management, social policy, and many other areas.

END OF THE PART