Biases & Decision Making

Decision making is a very interesting subject. It becomes even more interesting when you learn that every decision you take is biased. You may think that learning about those biases will help you avoid them, well, most of the time it won’t because they are automatic. This originates from the way our brain is wired. The human evolution was led by survival needs, where quick reactions were necessary. You can take the time to ask yourself some questions to check that your biases are not forcing you to take a "bad"decisions. This requires energy and time and may be good for big decision like: merging with another company, getting married, buying a car...

An HBR article by Robert F. Wolf counts six types of biases (http://blogs.hbr.org/2012/09/how-to-minimize-your-biases-when/). Those six biases can be summarized in the image below:



Short-stories to understand:
§  Anchoring:  You are influenced by number you see at the moment you take a decision. If I give you the price of my neighbors’ houses and then ask you to estimate the price of mine. You will use the price of my neighbor as an Anchor to estimate the price of mine.  In another situation, if I give you a random number like 10 and then ask you to give me the price of a book. I bet your guess will be close to 10Euros.
§  Framing: You need to buy a new car. You can be in two situations a car that fits your requirement but sold by a very unfriendly vendor and the same car sold by a very nice person. I bet you will buy the car to the nice person. Imagine then the consequences of framing on your daily life. You always go for the good feeling situation and marketers know it…
§  Availability heuristics: you know the story with the bread that always falls on the wrong side. It is wrong. The probability for the bread to fall on the wrong side is as high as the probability to fall on the other side. We just remember more easily the situation that made us have a strong emotional reaction.
§  Confirmation Bias: You finally took the decision to buy the new iphone and ordered it online. Chances are that you are going to look for information that proves your decision was right. The anti-iphone community could be harassing you, you will ignore it and prefer the pro-iphone community.
§  Commitment escalation: One day you go for a coffee and decide on the one that seems to be the best that day. You will return to this coffee the next time and the next one and the next one… In fact, you commit to the decision you took one day without reevaluating  your options. Maybe the coffee next door is fare better but you don’t know it! Try to spot in your life those commitments that escalated until habits and reevaluate you choice. Are they still a good ones?
§  Hindsight Bias: You learned how to use Google or to tie your shoes but you won’t remember it. It is not possible to remember when we learn something which make things harder when you want to “learn from your past failure”. How would you know that a particular action is the reason of your failure? Sometimes an external point of view such as a psychologist for a person or a consultant for an organization can help.


Even if biases are unconscious we can use this knowledge to take better decisions or help other take better ones. The following suggestions are not exhaustive. You can ask yourself questions at the six different levels as suggested in the graphic below. 


Do you know a better way to overcome Biases in decision making? Share with us in the comments!

UPDATES: 

If you want to learn more about Biases here are two links suggested by +John E. Smith

And a last one suggested by +Vanessa Gennarelli 

Thank you for your contribution!



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