Biases Flashcards
Survivorship
Tendency to overestimate your success. Guard against it by visiting the graves of the ones who didn’t make it.
Swimmers body illusion
Tendency to confuse the factor for selection with the result. Swimmers look like they do not because they’re swimmers but because they looked that way and then became swimmers. So, before you think to do sth for a certain result, reflect on weather selection was at hand.
Clustering illusion
Tendency to discover a pattern in what we see.
Consider a pattern first as pure chance.
Ex Jesus face in pancakes
Social proof
Aka herd instinct
Tendency to think you act correctly because the mass is acting the same way.
The more people follow Action A the truer we deem this idea.
Sunk cost fallacy
Tendency to keep on investing energy, money, time because you came so far.
Ex we’ve come so far..I’ve already invested so much…
Reciprocity
Tendency to not want to be in others people’s debt.
Ex they give you something and then wants something in return and you’ll give it to them
Ex church gives postcards and then ask you later to donate - dinner invitations going back and forth bc you feel you owe it
Confirmation bias I
Tendency to interpret new info so that it becomes compatible with our existing beliefs theories and convictions . This leads to ignoring and filtering out facts that disconfirm what we belief.
Ex prior solutions remain intact to fit existing belief
Ex diet success
Tip when exception comes up it’s usually disconfirming evidence
Confirmation bias II examples
- journalists only mentioning evidence that proofs their point
- Google marked as successful bc of creativity
- think People are good and then see it everywhere
Authority bias
Tendency to be influenced and withhold opinions or beliefs due to unconscious influence of an alleged authority
Ex co pilots afraid of pilots decreases safety. Now they have crew resource mngt to discuss any reservations
Contrast effect
Tendency to not be able to make absolute judgement and value things more/less in contrast to sth else
Ex walking back for saving 10eur on groceries but not 10eur on 1000 dollar suit.
Ex people find you less attractive when you’re out with your relatively prettier friends
Availability bias
Tendency to create a picture of the world based on what comes most easily to mind. Overestimate probability that sth happens to us that’s flashy.
Ex overestimate showstoppers in life
Ex consultants give you an answer that they most often do
Ex ideas we hear or say often are at forehead and become real even though they aren’t
Ex more word start that k rather thank k in third position (wrong but k start words are more available in mind)
Sol spend time with people who think differently than you do
It’ll get worse before it gets better
Tendency to predict and for people to believe that after an action things go worse before they get better. The one using it will always for some time win because of nothing changes, people think the prediction is true; if it gets better, the advice was fixed faster than expected.
Ex politician predicted difficult years
Ex consultant predicting that things can’t change over night
Story bias
Tendency to want to find meaningful stories in everything around us. Tendency to filter out any facts that contradict the meaningful interpretation of a sequence of events. Narratives are irresistible. We therefore have a false sense of understanding - because contradictory facts are left out.
Ex you retain better the king died and the Wien too due to grief, rather than the factual story the king died the queen died.
Sol always ask yourself who’s the sender, what are intentions and what is hidden under the rug
Hindsight bias
Tendency to male sense of a sequence of events once it happened. I told you so bias. In hindsight it seems plausible that sth ended in what we know. Risk to think you are a better predictor than you are and take too much risk.
Ex they split up bc they spend too much time
Sol keep a Journale and write down your Predixtions. You’ll see how bad a precursor you are.
Overconfidence effect
Tendency to overestimate your knowledge and ability to predict. The difference between what people know and what they think they know.
Experts are even more off.
Ex Frenchman think the re great lovers
Ex not using statistical evidence as your benchmark to succeed or not
Ex higher in man
Insights be sceptical if experts , favor the pessimist example to get more realistic insights
Chauffeur knowledge
Knowledge From People who have learnt to put up a show about a certain topics, but don’t have real deep knowledge.
Ex news anchors
Ex ceos are expected to have real knowledge but usually have Chauffeur knowledge
Sol understand what’s in your circle of control and what isnt. Experts will say I don’t k ow. Chauffeurs won’t.
Illusion of control
Tendency to believe that a person can influence something by doing something over which they have absolutely no sway. Placebo buttons nidge People into thinking they’re in control.
Ex throwing dice harder of you need a high number
Ex sending out good energy for good vibes
Ex you can influence your destiny
Ex button at traffic ligjts - making us think we have control over light makes us wait more patiently
Sol Focus on what’s you can rally I fluency
Incentive super response
Tendency to respond to incentives by doing what’s in your best interest. People respond quickly to changes in incentives, and respond to the incentives themselves not to grander intentions of them. Good incentives think about intent and reward.
Ex managers invest more time into lowering targets than growing business.
Ex farmers break dino bones into halves to get more rewards.
Ex good: making engineers stand under their own bridge. Bad ones overlook the underlying aim. (Rewarding Bank employees for each loan makes credit rating shit).
Regression to mean delusion
Insight that every extreme performance will be followed by less extreme performances that are close to the mean.
Insight: of you believe this you might tend to conclude that a certain action caused improvement in behaviors even though the action had nothing to do with it.
Sol when you hear sth got better after it was bad look out for regression to mean.
Ex bad school that enter a program will become better next year not because of the program but because of this insight.
Outcome bias
Tendency to evaluate decisions based on the result rather than on the decision process. Only in hindsight do signals seem clear (bc you make sense of outcomes) , at the time info might have been different
Ex judging doctor A as the best because no one died on his table.
Sol base judgement on looking at decision made at the time and filter out any information about outcome. Was the decision rational at the time- then good, continue doing so even if the outcome didn’t get you lucky.
Choice paradox
Insight That higher number of options destroys quality of life.
Inner paralysis - too many items will leave with no decision
Poorer selection - too many options let you decide based on one default marker and you don’t take into consideration other aspects
Unhappy - too many items make you always think that your choice wasnt a good one
Sol wrote down what you want and then stick to it. Be ok that you can never make the right decisions - good enough is great.
Liking bias
Tendency to buy something because you like the person selling it.
Liking is caused by
A - atttactiveness
B - similarity to me
C - if they like me and show me this
Ex advertising show Koalas over spiders, despite both are endangered
Sol pretend you don’t like the buyer when evaluating purchasing decision
Endowment effect
Tendency to consider things more valuable once we own them. Aka when we sell something we charge more for it than we initially thought it was worth - ownership makes us add zeros.
Ex you buy c for 10 someone offer you 20 and you say no.
Ex being more disappointed when not getting the job in the final round than not getting it in the first round. Outcome. Is the same.
Coincidence
Tendency to over interpret the occasion of one very improbable event as more than what it is - an improbable but still probable event occurring.
Ex thinking of someone and then they call
Ex people being delayed and then church explodes
Sol when something occurs draw out the other scenarios and reflect how likely they are to be true.
Groupthink
Tendency to make reckless decisions as a group because everyone aligns their opinions with the supposed consensus
This means motions are passed that wouldn’t have if only everybody would have been asked individually . This leads to filtering out any evidence contradictory to group belief.
Ex No one wants to be naysayer who destroys group spirit; everyone is happy to be part of the group
Sol if you’re ever in a tight unanimous group then speak your mind no matter what. A devils advocate is key to team success.
Neglect of probability
Tendency to lack an intuitive grasp of probability. We react to the magnitude of the outcome of an event and not its risk/probability of occurring.
Ex 2percent vs 50percent chance of getting electric shocks; people react the same way. Only at 0percent do they chill. „Zero Risk bias“.
Ex we like the solution than Brings 1percent reduction to zero percent of bad thing occurring more than an overall 4 percent reduction bringing it down to 2 percent.
Scarcity error
Tendency to overvalue things that seem to be rare or one of a kind . If we are deprived of an option we Suddenly seem it more valuable.
Ex choosing to close a deal because of an invented second buyer who want it. You’ll see the opportunity leave before your eyes.
Ex two groups receive many vs two boxes of cookies and are asked to rate the quality. The group with two boxes rate dir much higher.
Ex only two left!
Sol assess the value of a product only based on price and it’s benefits not on its availability
Base rate neglect
Tendency to disregard the fundamental distribution levels of any situation.
Most common errors is reasoning. When you look for an answer to sth and the. Reason it’s the solution that is the exception to the rule rather than what’s more likely based on probability distribution levels.
Ex who killed frank? A a Russian spy or B a middle class American. People will answer A. Ex investing in start ups because they will be A the next google. Vs B they won’t go anywhere.
Gambler‘s fallacy
Tendency to think that independent events will balance themselves out and you can therefore guess what happens next after having observed the previous event. It leads us to believe that something must change. Therefore you ignore that independent events don’t influence each other.
Ex casino always flips in black and therefore everybody then bets on red bc sth must change
Ex that’s different: weather; there is not all the time a 50:50 chance but interdependent forces are at work.
Sol for every event look for Independenzen vs interdepende. At casinos there’s pure Independence. Most other situation will „regress to the mean“ bc of interdependence.
Anchor
Tendency to judge something based on a previously known number. We start with something we are sure of and then estimate from there.
Ex consultant opening with 5 Million in last project as anchoring point for following negotiations.
Ex valuing price of wine based on your social security number. The higher your number the higher you value something as unrelated as the wine.
Sol always challenge yourself what might number might be influencing you
Induction
Tendency to draw universal certainties from individual oberste ations. We live with it every day thinking tmr our heart will beat, our husband love us.
Nothing is certain except taxes and death.
Ex cliff jumper saying he’s invincible because over 500 jumps have not killed him yet.
Ex the goose thinks his feeder is loving it but then kills it
Sol
Loss aversion - evil is more powerful than good.
Tendency to weigh a loss of something as worse than the gain of the same. Losing something make you sadder than gaining the same.
Ex if you want to convince someone don’t focus on the advantages, Highlight how it helps dodge disadvantages.
Ex employees don’t take risk because the perceived possibility of losing their career is a bigger loss than the perceived benenift of gaining a reward
Sol write things in a loss frame to convince people: women who do not do A have a decreased chance of getting benefits. (This loss on gain makes you act; more than a benefit statement: women who do A get the following benefits).
Social loafing
Tendency to not give 100 percent of power in a group effort.
When people work together, in visual effort decreases. But zero performance will not be reached because of social conseuqneces .
Ex two men pull a trick and each will only invest 95percent of their strength.
Ex the larger the meeting, the lower individual participation
Impli In meetings no one takes accountability but hides behind group decisions.
Sol in teams with specialists they will still give 100 percent because individual performance is visible
Exponential growth
Tendency to not intuitively have understanding for exponential growth . Instead people gather what doubling times mean.
Ex growth of 7pervent in death tolls vs doubling in 5 years.
Sol for
Growth rates don’t trust your gut.use the number 70
To understand doubling times .
Winners curse
Tendency that the winner of an auction is the loser on the end. Winners systematically pay too much for what the item is actually worth.
Sol Write down a number of what you want to pay then deduct 20lervent and don’t go over it. Also. Stay away from auctions.
Fundamental attribution error
Tendency to overestimate individuals influence and underestimate external, situational context factors.
Ex people discussing the soloist rather than the musical composition that makes it beautiful.
Ex ceo being replaced and blamed for performance rather than external factors of the industry a
Sol People on stage are not self governed individual. Place more attention on the influence that stage people are under and talk about that.
False causality
Don’t believe in the stork
Tendency to mistake correlation for causation. The apparent cause often turns out to be the effect.
Ex the graph for babies and storks are linearly
Increasing hence storks bring babies.
Ex women who use shampoo B have stronger hair (maybe actually the hair of those women is thick to begin with because it says thick hair on it)
Halo effect
Tendency to take a single easy to obtain fact that influence us how we see the big picture. We extrapolate conclusion about hohe whole situation or perso. Based on one easy fact.
Ex negative: race making us conclude about performance
Ex positive: mr right seeming like mr right
Sol fade out easy to obtainable facts before judgement and dick deeper before making conclusions. EG orchestras try out behind closed curtains.
Alternative paths
Tendency to warrant a certain success or gain at its obvious value without considering the risks or alteirnative paths (which decreases the value).
Ex you earn 1mio through giving it a chance with a gun in your mouth and pulling the trigger
Sol the most rational thing to do is to consider alteirnative risks and then choose the
Most boring way where all paths are very close to each other.
Forecast illusion
Tendency for society to take experts forecast at face value. They predict and we believe and never ask for the track record or scrutinize them when they are wrong.
Ex stock markets can’t be predicted.
Sol ask yourself A what incentive does expert have (guru vs real implications for him) How is his track record?
Conjunction fallacy
Tendency to think a story is more likely to happen due to an added and irrelevant fact - the story seems more plausible despite the fact that the added condition makes it more unlikely. However, these are a subset of a bigger event and therefore less likely to occur.
Ex what’s more likely the trip was cancelled vs the trio is cancelled because of an airport closure.
Impli of you add an irrelevant fact to your story people will see it more likely
Sol of an additional criteria has to be met it becomes less likely to happen
Framing
Tendency tk react differently to the same situation depending on how it’s presented.
Ex people rate B better: A meat is 98 fat free B meat has 1 percent fat was
Ex framing Genozide as social cleansing
Sol think about how the same thing can be framed differently and what this really means
Action bias
Tendency to want to look active even though it achieves nothing. Because as hunters inaction was fatal. Even though our world now rewards reflection. “All of men’s problems stem from men’s inability to reflect alone in their rooms”
Ex goal keeper never stand in the middle even though probability of the. All going there is 1/3.
Ex negative: young officers jump to action in a fight even though statistically there’s less causalties when they observe and wait. Action in this case aggravates the situation.
Ex doctores not waiting but prescribing random stiff
Sol in new or shaky situation wait and see rather than overdoing stiff.
Omission bias
Tendency to think of a situation as less bad if caused by inaction versus action. In society people can lose their jobs if they chose the inactive way even though it might be better for all. Clear: a future misfrtuone might be awarded by direct action but this doesn’t motivate us enough to do it (misfortune caused by inaction is less bad)
Ex person a dies because you didn’t cry for help versus person a does because you pushed them
Ex active suicide help is illegal vs not reactivating somebody’s hear beat isn’t
Ex not vaccinating is perceived better than vaccinating
Ex journalist are nice to come companies that develop nothing new compared to the ones that produce bad new things
Self serving bias
Don’t blame me
Tendency to atttibute success to ourselves and failure to external factors. You overestimate your
Own positive contributions
Ex companies goes well, ceo reports about his good decisions; companies go bad, ceo reports about bad market and exchange rates.
Ex good grades because of you, bad grades because of the teacher
Ex husband thinks he does
More than wife
Sol to get some idea about what you can attribute to yourself, ask your enemy
Hedonic treadmill
Be careful what you wish for
Inability to predict our own emotions. After the big win you’ll feel as content or discontent as before.
Ex break up and the. After three months you’re actually fine again
Sol how to make decision or change so that we’re actually happier? A avoid things that you dislike B short term holiness from material things C aim for free time because happiness comes from what you actively do
Follow your passions and friends.
Self selection bias
Tendency to overestimate probability that things Happen. To yourself.
Ex only I’m stuck always in a traffic jam. Even though probability is the same for all.
Ex sending out Surveys to understand how you’re doing; they’ll be useless because they will only be answered by people who’ll take the time and are committed.
Association bias
Experience damage your judgement
Tendency to see connections where none exist: to associate an
Unrelated thing with an outcome of a situation and act accordingly going forward.
Ex cat burns itself on a hot stove and will
Never sit on any stove anymore
Ex on hot days you get bad news from the doctor so you cancel all appointment next time
It’s warm
Ex pavlovs dog
Ex shoot the messenger syndrome; you fire people who bring bad news
Sol actively. Ahlen he yourself to disconnect your gut associations and then don’t allow to
Act like it’s true.ceo: ask your employees to give you and news.
Beginners luck
Be wary when things are off to a great start
Tendency to overestimate your abilities (and probability of you succeeding) when you get lucky the first time. Overtime probability of success will normalize and therefore you should be wary of the first success.
Ex fist two acquisitions are great, but third
One is a distaster
Ex everyone got lucky flipping houses in the US but after a while the market returned to normal and losses happened
Sol difficult to find difference between luck and talent. Talent: good relatively to there over a long period of time. If you’re good among small competitors groups chance are it’s talent too.
Disprove your assumption that your talented by sending something to more than one person to see if you get the same reply or if you simply got lucky there.
Cognitive dissonance
Sweet little lies
Tendency to reinterpret something that happened retrospectively for it to make sense and not leave you as a failure. (You resolve a cognitive dissonance)
Then your decisions makes sense in retrospect and you didn’t need to admit error.
Ex fable of fox unsuccessfully getting fruit and then interpreting the endeavor as stupid because grapes aren’t ripe yet
Ex you don’t like sound of your car but don’t want to admit failure so you tell yourself th sound helps you to drive safely. And the. You’re happy with it.
Ex you lose a job to a other candidate. Instead of admitting he was better you convince yourself you didn’t want it
Hyperbolic discounting
Love each day like your last but only ah days
Tendency that the introduction of “now” makes us choose less value now over more value later.
The closer the reward is the more emotional pain incurs and we make inconsistent decisions
Ex chose 1000 now rather than 1100 in 4weeks. But they will choose 1100 in 13 rather than 1000 in 12 months
Ex marshmallows. Give you one now or two in 10m. People will eat the one now.
Impli if you sell something, do it now not later. So only live in this now idea once a week or you’ll lose out
Any lame excuse
Because justification
The tendency to be more engaged, satisfied, happy with an action you see when you know the “because”.
It doesn’t matter the logic of the because, but people will follow more easily
Ex 60 will let you in front of line of you ask nicely. 95 will do so when you tell them…because I have to copy pages (which is a stupid reason)
Impli if you want something or justify yourself always put a because.
Decision fatigue
Decide better decide less
Business
Tendency to lose willpower after having taken many decisions. Willpower also drops with low blood sugar.
Ex court decide more courageous until lunch and after recesses. But else they will choose easiest part and go for status quo
Sol schedule meetings where you need decisions so that people have willpower still
Contagion bias
Would you wear hitlers sweater?
Tendency to be unable to ignore a connection that we feel for certain items (from long ago or indirectly). Then we make decision based on this irrational fear or feeling.
Ex not wanting to wear hitlers sweater
Ex not wanting to drink from glasses from Saddam Hussein
Problem with averages
There’s no average war
Tendency to talk and believe in averages even though they
Often don’t account for the distribution of outliers.
Ex Tom cruise changes the average income of the actor job tremendously uo.
Sol don’t give advice based on averages h less you know the underlying distribution.
Motivation crowding
Bonuses destroy motivation
Business
Tendency that small Monterey incentives crowd out other types of incentives.
Money does not always motivate. Often it will do the opposite because you’ll reflect your actions /effort with regard to how much money there was offered.
Ex 50 will say yes to hosting a charity event without money. If you introduce a 2000 eur
Payment for those who host, it’ll go down.
Ex parent pick up their children even later when they can get away with a small fee.
Impli don’t use bonuses to stir up engagement. People will end up doing stuff only because of it
Twaddle tendency
If you have nothing to say, say nothing
Business
Tendency to use random word connection to disguise intellectual laziness, stupidity, underdeveloped ideas.
If it goes with authority bias, it can be very misleading because sth that doesn’t make sense is taken at face value
Ex journalists who engage soccer players into talks where they are unable to think
Ex beauty queen blabbering for a long time not knowing what’s he’s saying
Impli be simpel and clear or say nothing
Will Rogers phenomenon
I’m trade average of two states
Phenomenon to create an illusion of real change or improvement by changing internal compositions or definition. Also known as stage migration.
Ex portofolia A is good and B is bad; you move some from a to B - A has less items so average increase and B increased too.
Impli when you hear an average or number change challenge if there’s been a change or if the internal composition simply changed
Information bias
Give your enemy information
Business
Tendency to want more information even though the most critical facts are already available.
Risk: Additional info wastes time and money. Also the more info you have the more it might
Mislead you in choosing the answer to a Q.
Ex is La or San Antonia bigger - if you know both cities you’ll guess wrong, of you know one city, you’ll go for that.
Ex all eco info before the crisi, didn’t matter. It happened.
Sol: try to forget to amass all data; get by with little info and make decisions; superfluous knowledge is misleading you
Sol: confuse your enemy with tons of info
Effort justification
Hurts so good
Business
Tendency to overvalue something that you have put in a lot of effort.
A special case of cognitive dissonance
Ex throwing out all exvoet for a effort pin; needing money but not selling your self made Harley.
Ex groups use it to bind members to them via initiation rites - the harder the entry exams the more binding . People will deem the hard work they needed to go through as justification that it’s worthy and needful in their lives.
Ex IKEA effect - funrtinue we assemble ourself a is more valuable to us
Ex business you build it, you don’t want to throw it away - but your also unable to appraise it
Ex business you introduce a new tool that’s all automated (people who did the job before won’t like it because it’s no longer effort ), so introduce sth they need to do so it’s effort
The law of small numbers
Small things loom large
Business
The law of chance makes small entities more vulnerable to fluctuating averages. Because there is fewer peopel/items/… than in big entities, one hit or fail will have more tremendous effect on the average.
Ex start ups seem to hire smarter people (but they have less people)
Ex average theft rate
Impl Business: think about the conclusions you draw from research and or how you can use it as a convincing techniques to get things your way
Expectations
Handle with care
Business
Tendency to act according to known expectations towards yourself or others. Expectation Alter biochemical of the Brian. Therefore expectations change reality.
Ex student were randomly selected as smarter and therefore developed much highe IQ than a Control group - because of more attention by teachers, Rosenthal effect
Sol raise expectations towards yourself and others you love to raise motivation; lower them for what you can’t control. But formulate it in a as-is state.
Impli business branding according to expectations
Simple logic
Speed traps ahead
Business
Finding that logic is often not followed but that intuitive answers/the most plausible ones that come to mind easy are used.
Ex you drove 100 there and 50 back, what was your average speed- 75? No.
Ex more in the book chapter 63
Impl don’t take easy answers as your final ones.
Impl don’t assume that people will see the rational good result. They’ll see the intuitive one. So explain and show them.
Forer Effect
Expose a charlatan
Business
Tendency that people identify their own traits in universal descriptions.
It’s made up of
General statements -
Flattering statement - we attribute good things to ourselves
Feature-positive effect - no negative statements
Confirmation bias - we accepts what’s there and corresponds to our self image and unconsciously filter out the rest
Ex business analysis of companies
Ex astrology and image Potraits
Volunteers folly
Voluntary work is for the birds
Business
Tendency to engage in voluntary work that youre unfamiliar with despite its small value it’ll bring.
Voluntary folly for two reasons
- an hour of your time is inefficient based on your skills
- you’re taking away from someone who can help more efficiently
Sol before engaging in voluntary work think about what your hour is worth on dollars (the. Donate) or think of how you can use your best skills here rather than doing what they want you to do
Affect heuristics
You’re a slave to your emotions
Business
Tendency to make momentary judgement. An automatic, one dimensional reply that prevents you from seeing risks and benefits apart, which indeed they are, but put them on the same sensory thread. Depending on you liking or disliking a word, you’ll weigh benefits and risks intuitively disproportionally high or low.
Irrational choice comes from affect heuristics/ if you like it, in an effect you’ll say benefits are greater, if disliked, risks are greater
Impli unrelated things influence each other: sun shine makes stock market rise.
Impli we substitute what do I think about this with how do I feel about this.
Introspection illusion
Be your own heretic
Toni
The belief that reflection leads to truth and accuracy. Therefore we are confident in our believes.
We react threefold to people who don’t share them:
1. Assumption of ignorance- the reason you disagree is because eyounditn know better : let me convince you
2. Assumption of idiocy. You have info but are stupid
3. Malace - person knows and understands
But wants to confront you
Impli you think you are superior. You’ll come up with many false predictions of future.
Sol be Critical with yourself!
Ex people decided on one image and where shown another one close up and they didn’t notice(because they were internally convinced)
Inability to close doors
Set fire to your ships
Business
Toni
Tendency to do everything to keep many doors open. We don’t want to lose options even if it’ll give us less value in total.
Options seem to be free but really they aren’t because it costs Brian power to weigh them and we end up with no decisions.
Implies you can’t motivate and focus people by selecting the options for them and removing what you don’t want them to do
Impli business of you give too many options to ceos they won’t choose any in the end.
Sol create list of what to not engage in. What to not consider.test options against your not to engage in list.
