People aren’t as rational as we would like to think.
From attentional bias — where someone focuses on only one or two of several possible outcomes — to zero-risk bias — where we place too much value on reducing a small risk to zero — the sheer number of cognitive biases that affect us every day is staggering.
Understanding these biases is key to suppressing them — and needless to say, it is good to try to be rational in most cases. How else can you have any sort of control over investments, purchases, and all other decisions that you make in your life?
To convey the breadth of cognitive biases, we’ve picked out 57 of the most notable ones from a much longer list on Wikipedia. [Aimee Groth contributed to an earlier version of this article.]
A bias where people make faulty conclusions based on what they already believe or know. For instance, one might conclude that all tiger sharks are sharks, and all sharks are animals, and therefore all animals are tiger sharks.
Read more about belief bias.
This is the tendency to see streaks or clusters in random events. A gambler after watching a red come up multiple times in a row on a roulette table may erroneously conclude that red is hot. In a related bias, known as cognitive bias, the gambler may conclude that black is particularly likely to come up since it hasn't come in a while. In fact, the results are always random.
Read more about the gambler's fallacy.
Where people believe prior evidence more than new evidence or information that emerged. People were slow to accept the fact that the earth was round because they tended to believe earlier information that it was flat.
Read more about conservatism.
When people who are smarter or more well informed can not understand the common man. For instance, in the TV show 'The Big Bang Theory' it's difficult for scientist Sheldon Cooper to understand his waitress neighbour Penny.
Read more about the curse of knowledge.
Investing more money or resources into something based on prior investment, even if you know it's a bad one. 'I already have 500 shares of Lehman Brothers, let's buy more even though the stock is tanking.'
Read more about irrational escalation.
Our expectations unconsciously influence how we perceive an outcome. Researchers, for example, looking for a certain result in an experiment, may inadvertently manipulate or interpret the results to reveal their expectations. That's why the 'double-blind' experimental design was created for the field of scientific research.
Read more about observer-expectancy effect.
When we believe the world is a better place than it is, we aren't prepared for the danger and violence we may encounter. The inability to accept the full breadth of human nature leaves us vulnerable.
Read more about optimism bias.
An error that comes from focusing only on surviving examples, causing us to misjudge a situation. For instance, we might think that being an entrepreneur is easy because we haven't heard of all of the entrepreneurs that have failed.
It can also cause us to assume that survivors are inordinately better than failures, without regard for the importance of luck.
Read more about survivorship bias.
The preference to reduce a small risk to zero versus achieving a greater reduction in a greater risk.
This plays to our desire to have complete control over a single, more minor outcome, over the desire for more -- but not complete -- control over a greater, more unpredictable outcome.
Read more about zero-risk bias.
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