A bias is an unconscious, natural and immediate prejudice or tendency to a particular action. Bias-driven decisions may or may not be consistent with that which may result from a more deliberative or thoughtful process. Biases can be harmful: think of prejudices in employment, housing and education. They can be helpful as when we slam on the car brakes to avoid that deer crossing the road. In decision-making, I admit to a prejudice against most fast, “system one” decision-making because I’m more comfortable deliberating (a lot!) first. Certain biases may be hard-wired into who we are as human beings as a result of evolution. They may be a “design feature”, rather than a flaw. Rather than trying to resist biases, can we use them to improve decision-making for ourselves and for others?
To begin to answer this question, I reviewed my list of favorite and most potent biases (Wikipedia has more than 170) and compiled some thoughts about how a manager or policy maker or anyone wanting to make wise decisions for themselves might use them to encourage preferred choices. I also wondered how, as a decision maker, citizen and employee, I might guard against self-sabotage and manipulation.
This table offers some examples of biases that affect decision-making, brief definitions and how we can leverage them to help others (as policymakers and managers) and ourselves make better decisions (choice architecture). Using these biases can be ethically questionable, especially when influencing others (I have asterisked the riskiest ones). It is for these cases and when we want to limit the affect of these biases, such as in negotiations, that I have added some thoughts on how to fight them.
| Bias | Definition | Use it | Fight it |
| Ambiguity Aversion | Preference for risks where probabilities are known vs. unknown | Increase insurance sales by emphasizing risk elimination* | Recognize tendency to over-insure and discount one’s intuition as to correct amount |
| Anchoring | We can be excessively influenced by the starting point or first impression. | Set the default or first choice, e.g., for retirement savings, at levels in line with long-term welfare. | Try different perspectives and starting points; understand how it can be used for negotiation. |
| Availability | We can be unduly influenced by the availability in memory of similar examples. | Make evidence supporting the preferred decision salient and easily available.* | Obtain/provide opposing viewpoints and contrary evidence. |
| Bandwagon | People tend to accept beliefs of their group. | Note that the preferred choice will put them in the good company.* | Structure group decision making to ensure that divergent opinions are expressed and respected. |
| Clustering Illusion | We tend see patterns in random events. | Cite trends as evidence for a decision.* | Analyze the perceived pattern statistically, over different timescales. |
| Confirmation | We attend to evidence that confirms our prior beliefs and ignore the other evidence. | Present preferred choice as consistent with prior beliefs; avoid contradicting strongly held opinions. | Seek out contrary opinions, devil’s advocates and ask neutral questions. |
| Current Moment | We prefer to accelerate pleasure and defer pain, which we later regret. | Emphasize the near-term benefits of the preferred decision; provide choices like save more tomorrow. | Visualize the future ‘you’ and empathize with them. |
| Framing | People may accept uncritically the way a choice or problem is defined. | Define a problem in a way that is favorable to the preferred decision.* | Reframe a choice or problem from different perspectives. |
| Halo (horns) effect | Our general impression of something or someone affects our impressions about its specific character or properties. | Have a celebrity endorse the preferred choice. | Don’t overvalue expert opinion; Make decisions objectively, not based (solely) on endorsement; watch for irrelevant generalizations. |
| Loss aversion | We can be overcautious and so much more sensitive to losses than gains that we miss opportunities. | Emphasize costs and risks of non-preferred choices. Present desired alternative as reducing costs. | Measure return on risk and cost of reducing risk; set objective criteria/thresholds for action based on both. Reconsider assumptions and reasoning for conservatism. |
| Outcome | We judge decisions based on the outcomes, rather than the decision process. | If possible, note how outcomes in similar, past situations have been positive.* | Build a habit and consensus of judging decisions on process not outcomes. |
| Placebo | The mere belief in a positive outcome can increase the likelihood of a good result. | Post-decision, reinforce a belief in a positive outcome. | Understand legitimate cause/effect linkages. |
| Recency | We tend to weigh latest data more heavily. | Make your most important point last. | Review historical data and perform scenarios analyses. |
| Representativeness | People assume the probability of an event will be the same as that of another event which seems comparable. | Make an analogy between the preferred choice and something attractive.* | Watch for irrelevant comparisons and stereotyping. |
| Salience | We tend to exaggerate the likelihood and relevance of emotional events. | Provide vivid and compelling information supportive of the desired choice. | Have objective data on probabilities of events and outcomes. |
| Sunk Cost | Incorporating past investment decisions into current ones (“throwing good money after bad”). | Remind people of the commitment and investments they’ve already made that is consistent with preferred choice.* | Ignore prior investments. |
In short, we know a lot about what can get in the way of good decision-making. We can use these biases to nudge or trick ourselves and others into making better decisions. Especially as managers and policymakers, we ought to use these powerful tools conservatively, thoughtfully and respectfully. And we can pro-actively invest time, slow down and engage our full intellectual capacities in important decisions to offset unhelpful biases and those who might use them to influence us against our interests.
Other references:
www.businessinsider.com/cognitive-biases-that-affect-decisions-2015-8
www.Changingminds.org
io9.com/5974468/the-most-common-cognitive-biases-that-prevent-you-from-being-rational
Lowry, Alex. No Problem, Worksheet C.1, Avoiding Psychological Traps
http://thenextweb.com/lifehacks/2015/09/26/5-cognitive-biases-that-are-killing-your-decisions/
Ambiguity aversion added March 21, 2016.