Tag: Overconfidence

Outsmart the Availability Heuristic

Salient events are easier to remember, so we give them more importance in our decisions. Psychologists call this simple fact “the Availability heuristic”, which is a cognitive bias.

Cognitive Bias?

Remember that cognitive biases are mental shortcuts that help us survive in a dangerous world, but they fool us in a complicated one. When you see a lion in the Serengeti, you need to run without thinking. But when you decide to buy a car, it would be better to avoid running to buy the one you see frequently in the ads and think thoroughly before making the decision.

Examples of the Availability Heuristic

Salient memories from one’s experience will impact its future decision, when searching for a job, a neighborhood, a partner, a vacation destination, etc. We focus on that specific event and forget about the rest. We make a poor decision, and we often regret it.

Plane crashes are so rare that everyone knows about them when they happen. Yet they seem to horrify people much more than car accidents, which cause many more victims… Sharks, Tsunamis, Terrorist attacks, etc. These are a salient cause of death, but they have, by far, the least number of victims compared to car accidents or medical errors.

AvailabilityHeuristic.png

The media are an enormous « availability bias » machine. Journalists and reporters are both victims and contributors to this social phenomenon. A journalist that reports “a plane departing from Berlin had landed safely in CDG airport this afternoon” will most probably lose his job. Continue reading “Outsmart the Availability Heuristic” →

Outsmart The Planning Fallacy

Projects go over-budget and over-schedule; small ones, like renovating your kitchen, and huge ones, like constructing the Sydney Opera House. One main reason is our overconfident optimistic approach to planning. Behavioral psychologists call this the “Planning Fallacy“.

This post defines the concept of planning fallacy, gives examples of its consequences on some global projects, and provides some tips to mitigate it.

The Planning Fallacy

The planning fallacy is when we underestimate the time and resources needed to complete a project. We are often optimistic about our performance and the outcome of the project, so we take our desires for real plans.

The planning fallacy is a cognitive bias that fools our decision-making ability into considering the best-case scenario. It has a somewhat positive side, which is risk-taking. This cognitive bias allows us to take both small risks, such as opening a small business, and huge risks such as starting a war.

Catastrophic Project Plans

The following chart presents some major projects around the globe that went catastrophically over-budget. Notice the trend; the bigger the project, the higher the overbudget.

Sans titre

Mitigate the Planning Fallacy

Among the methods to mitigate the planning fallacy, we present the major three: Continue reading “Outsmart The Planning Fallacy” →

Outsmart your Confirmation Bias

The first cognitive bias that we will review in the series “Outsmart Your Biases” is the Confirmation Bias, that is, the tendency to search for, interpret and recall information in a way that confirms our opinion, and neglect information that contradicts it.

The Confirmation Bias

Confirmation bias is one of the most common biases that have direct consequences on our personal life and professional career. The examples are endless. We often seek information to prove that our political party is right. When we like a person, we don’t want to see her character flaws. To prove the validity of our proposed strategy we search on google for “Is the [proposed strategy] better than [opposite strategy]?”. In a job interview, we frame our questions in a way to confirm our beliefs or our first impression of the candidate. etc… Try to figure out in which decision you were prone to it.

Jeff Bezos about today’s internet: “a Confirmation Bias Machine”.

To outsmart your confirmation bias, you may use the following tricks:

  • Ask for an outside view of the topic at hand and seek criticism.
  • Search for the pros and cons of the different options.
  • Suppose the opposite: be the devil’s advocate.

Such debiasing strategies can be performed in brainstorming format, in informal discussion, etc.