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 200200 lives vs. letting 400400 die out of 600600.
  • 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.