The distractions and biases that seduce us when we make decisions

Bidvest CIO Campbell Such writes how seemingly simple things divert people from making rational choices whether at work or in their personal lives.

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Cognitive biases are the built in ways we think that help or hinder our ability to make good and rational decisions.

It was Friday and yet again Roger watched with suspicion as Andrew left the work site with his empty wheel barrow.

Andrew worked in a pulp and paper mill as a welder. Every Friday he would leave the pulp and paper mill pushing his empty wheel barrow with an empty sack over it. Every Friday, as Andrew was leaving the site, Roger, the security guard, would ask Andrew what was under the sack. “Nothing Roger” was always the answer. Andrew would lift the sack to prove it.

Many years later Roger bumped into Andrew. “What were you up to all those years ago with your wheelbarrow on Fridays? I know you were doing something dodgy - I just never worked out what it was. Andrew looked at Roger with a wry smile: “I was stealing wheelbarrows.”

Roger’s was shocked he hadn’t worked it out. Seduced by the diversion of the sack, the possibility that the wheelbarrow was being stolen never entered his head. And just like Roger had a blindspot for the theft of the wheelbarrow, we all have a weakness for little understood, but formidable, influences on our decision making known as cognitive biases.

So what are these cognitive biases?

Keep an eye out for the impact that cognitive biases could be making on your decisions.

Campbell Such, Bidvest

Cognitive biases are the built in ways we think that help or hinder our ability to make good and rational decisions. They generally operate outside of our awareness and result in us making consistent reasoning errors that strongly influence our decisions. To give you a feel for what they are, we're going to go over three of them:
1 - The Fundamental Attribution Bias
2 - The Confirmation bias
3 - The Gambler's fallacy

First up let’s cover the Fundamental Attribution bias.

The Fundamental Attribution bias is our susceptibility to simultaneously believe two things when we observe someone’s ‘negative’ behaviour:
- The person’s personality is the key reason for their negative behaviour
- The role and power of their situation has little to do with their negative behaviour.

When in reality it’s generally the situation or a combination of both.

For example, when a car in front of us cuts us off, we immediately attribute their behaviour to arrogance and rudeness. However, what actually caused it was the role and power of their situation. What you didn't know was that the driver just had a call from his pregnant wife who has gone into labour. So he had to urgently get off the freeway to turn around to go get her and take her to hospital. The driver was not being arrogant or rude; he was in an emergency. So that’s a quick introduction to the Fundamental Attribution bias. Now let’s move on to the Confirmation bias.

Secondly - The Confirmation Bias

The confirmation bias is noticing and favouring information that confirms our existing beliefs or biases and simultaneously disregarding information that goes against our belief or biases. As Warren Buffet so elegantly put it: “What the human being is best at doing is interpreting all new information so that their prior conclusions remain intact.”

For example, if you follow a sports team you’ll have a tendency to notice all the times the referee makes a ‘poor’ decision that goes against your team and tend to not notice the ‘poor’ decisions that go against the other team. A supporter for the other team will have the opposite scenario. Both can’t be right - but because of the confirmation bias both think they are. It is funny the brain works, which leads us onto a common one we all can easily get sucked in by…

Last but not least: The Gambler's fallacy

The gamblers fallacy is the susceptibility for us to believe that future probabilities are altered by past events, when in reality they remain the same. It’s a result of the misapplication of the Law of Large Numbers.

Every flip of a coin has the same chance of a head or a tail as the previous flip. The gamblers fallacy comes because we know that if you flip a coin 100 times you should get 50 head and 50 tails (on average). Where we make the mistake is applying that to the next flip where the odds are still 50/50 for that flip.

For example: You've ﬂipped a coin nine times and it’s come up tails nine times in a row. The gambler’s fallacy would have us believe there is a much higher chance of the next flip being a head. However (assuming it’s a fair coin) the chances of a head turning up is still 50/50 and is the same as the chance of a tail on the next flip.

Well, that might be true for most people but not for me

While we may think that we’re not susceptible or influenced by cognitive biases, we’re all here as a result of millions of years of evolution of the brain’s function and capability – the useful, the detrimental and the concealed. Cognitive biases are an inescapable part of us. We’re all affected.

It was just that we weren’t even aware they existed until 1972 when Amos Tversky and Daniel Kahneman first introduced the idea. They showed they could consistently repeat the ways in which people’s judgments and decisions were different from what you’d expect if they were making a rational choice. We now know there are over 100 different cognitive biases.

But isn’t there a way we can at least limit the influence of cognitive biases?

Yes, it’s possible to curb their effect but, at the same time, we can’t live without them. They are the result of a whole raft of time and energy saving shortcuts the brain takes to help us function, and successfully get through the day. Hmmm….so they can help us and they can hinder us. Now what? The best approach is to try and become aware of when they’re adversely affecting a decisions we’re making.

Just by being alert to their existence we can begin to recognise when and where they’re affecting us and get on the front foot to try and mitigate their effect. Don’t underestimate how difficult this is. It requires vigilance and self-awareness especially when making the big and important decisions.

This only covers three of them … is that enough?

There are over a hundred cognitive biases but the Fundamental Attribution bias and the Confirmation bias are two of the biggies that affect so many of our decisions. Don’t be like Roger with his blind spot for the theft of the wheelbarrows. Keep an eye out for the impact that cognitive biases could be making on your decisions.

Funny how it’s always ‘easy’ to see things in others we struggle to see in ourselves. The next time you have to make a significant decision, it might be worth asking a trusted colleague if they can see any indications a sneaky cognitive bias has hijacked your thinking.

Campbell Such is GM IT for Bidvest, a wholesale food distribution business and a top 50 company in NZ. He has a varied career in New Zealand and internationally, working in technology, management and roles in marketing and sales. Reach him at Campbell.such@bidvest.co.nz and through his blog.