Biases can creep into our thoughts by stealth, sometimes triggered by others.
How many passengers do you think New York’s LaGuardia Airport served last year? Would you say the count is more or less than 10 million? Make your best guess, and I’ll give you the answer at the end of this article.
Biases are cognitive errors – faulty thinking and reasoning. When our thoughts are clouded by biases, we may jump to erroneous conclusions or make unwise decisions. Biases can become habitual over time and can even be triggered by others who wish to manipulate our behavior. Through complacency, our biases reoccur again and again, tainting our thoughts as we solve problems and make decisions. They are tough, but not impossible, to root out.
There are dozens of cognitive biases. Here are six that I find especially troublesome – and all too common:
- Fundamental attribution error – an assumption that negative behavior in other people is caused by some innate flaw, while concluding that similar behavior in oneself was brought on by external circumstances. For example, if someone backs out of a parking space and almost hits a pedestrian, I might conclude that the driver didn’t look before backing out, and is therefore careless. However, if I do the same thing, I might assume that the pedestrian was in my blind spot when I looked, and that there’s no way I could have known he/she was there.
- Endowment effect – over-estimating the value of something merely because it’s yours. In a famous experiment at Cornell University in the 1990s, researchers gave coffee mugs to half the students in a class. The other half received nothing. Those with mugs were asked to set a price at which they would sell. Those without mugs were asked to set an amount they would be willing to pay. Mug owners set their minimum selling price at $5.25, while buyers set the maximum price they were willing to pay at $2.75. Even though the mugs cost them nothing, the mere fact of ownership caused the sellers to over-value their mugs beyond what buyers were willing to pay.
- Sunk cost fallacy – throwing good money after bad, rather than cutting one’s losses. This fallacy is sometimes called “the Concorde effect,” after the supersonic airliner. There was never enough interest from airlines in buying Concorde jetliners to justify production. And yet the British and French governments, who jointly funded production, continued to subsidize the Concorde rather than admit they had wasted billions on a non-viable project.
- Framing bias – being influenced by the way information is presented rather than the information itself. For example, multi-level marketing companies claim to offer an opportunity to own your own business for very little cost and to achieve unlimited earnings, based on how hard you work at making it a success. That sounds much better than framing the offer as an opportunity to sell their products (which you must buy from them) on a straight-commission basis, and with no benefits.
- Post hoc fallacy – assuming that one event caused another, when the first event merely preceded the second event. For example, televangelist Pat Robertson once claimed to have prayed a hurricane away from Virginia Beach, where his headquarters is located. The storm hit Sodom and Gomorrah instead (i.e., New York and New Jersey).
- Anchoring bias – the tendency to be influenced by information that is known, but irrelevant, in making a decision. Classic examples are the sticker prices on new automobiles; the “manufacturer’s suggested retail price” on consumer items, such as electronics; and mark-downs (e.g., “today’s price: $19.99 / was “$29.99”). As I tell my students: The only relevant price is what you have to pay – right here, right now. Everything else is both irrelevant and a trap.
Were you influenced by anchoring in your estimate of the passengers served by LaGuardia last year? The actual number is 28.4 million. As you can see, it’s difficult to avoid cognitive biases. Doing so requires vigilance and conscious effort to anticipate and disregard them. Most of the time we do not function at that level of heightened consciousness, reverting instead to our habitual thinking patterns. The more you practice, the more aware you will become of external attempts to trigger your biases, and the better you will become at filtering biases out of your thinking.
-Dave Hartley, PhD, MBA