Decision Making Biases – Quick Review Notes

Bias Awareness

• Everyone is vulnerable to systematic thinking errors.
• Key defenses: AWARENESS, TRAINING, MINDFULNESS.

Core Cognitive Biases

• Overconfidence
  • Over-estimate accuracy of own judgments, esp. outside comfort zone.
  • Drivers: illusion of superiority, control illusion, memory of wins > losses.
• Inertia / Procrastination
  • Delay choices to avoid conflict or unpleasant steps ⇒ “analysis paralysis.”
• Immediate Gratification
  • Prefer short-term rewards; weak sense of future value.
• Anchoring
  • First info sets a mental anchor; later data poorly adjusted for.
• Selective Perception
  • Interpret ambiguous data through personal attitudes, interests, background.
• Confirmation Bias
  • Seek & weight data that supports existing views; ignore disconfirming facts.
• Framing Effects
  • Presentation changes choices (gain vs. loss, attribute, goal frames).
  • Example: saving 200 lives vs. letting 400 die out of 600.
• Availability Bias
  • Judge likelihood by ease of recall (e.g., fearing plane crashes over car accidents).
• Representativeness Bias
  • Assume patterns in randomness; rely on similarity over statistics.
  • Outliers regress to mean; small samples mislead.
• Sunk-Cost Fallacy
  • Treat past, non-recoverable costs as if current investments.
• Limited Search (Bounded Rationality)
  • Stop at first acceptable option (satisficing) to manage complexity.
• Emotional Involvement
  • Strong emotion (stress or excitement) narrows attention & speeds impulsive action.
• Self-Serving Bias
  • Attribute successes internally, failures externally; reverse for others.
• Hindsight Bias
  • After outcomes known, believe we “knew it all along,” impeding learning.

Coping with Randomness

• Chance events occur; avoid seeing patterns where none exist.
• Do not assign meaning to coincidences or invoke fate/superstition.

Reducing Bias in Decisions

• Actively search for disconfirming evidence.
• Evaluate LONG-TERM over short-term consequences.
• Reframe problems; test multiple perspectives.
• “Walk in someone else’s shoes” to offset selective perception.
• Widen experience base; seek outside opinions & non-obvious options.
• Accept that extreme results rarely persist; consider regression to mean.
• Manage emotional state before committing.
• If it seems “too good to be true,” escalate scrutiny.