Assess situations more accurately by identifying common biases

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DECISION & PROBLEM SOLVING

Five common biases Non-exhaustive

Bias	Description	Example	Question
Confirmation	Tendency to search for, interpret, and remember information that confirms one's preconceptions.	A manager only considers data that supports their current strategy while ignoring data suggesting it may be flawed.	Am I only seeking information that supports my current beliefs?
Availability	Tendency to overestimate the importance of information that is readily available.	A manager makes a decision based on a recent event rather than considering all relevant data.	Am I relying on information just because it is recent or easily available?
Anchoring	Relying too heavily on the first piece of information encountered (the "anchor") when making decisions.	An investor is overly influenced by the initial stock price when evaluating a stock's current value.	Am I giving too much weight to the initial information?
Overconfidence	Tendency to overestimate one's own abilities or the accuracy of one's beliefs.	A CEO overestimates their ability to predict market trends, leading to overly aggressive business strategies.	Am I being realistic about my capabilities and the uncertainty involved?
Outcome	Judging a decision based on its outcome rather than on the quality of the decision at the time it was made.	A manager evaluates a decision as poor simply because it led to a negative outcome, regardless of the decision-making process.	Am I judging the decision based on the outcome rather than the process?

WHY IT MATTERS

Assessing situations and decision alternatives accurately is crucial for making well-informed choices and effectively allocating resources (time, money, etc.).

Biases can distort this assessment, leading to misinformed decisions that negatively impact outcomes.

Recognizing and neutralizing these biases support objectivity in decision making.

WHAT TO DO

Ask yourself questions to identify potential biases, and above all, whether you have fears or incentives that might affect your judgment.

Diversify your sources and perspectives to challenge assumptions and gain a comprehensive view.

Reflect on past decisions to understand how biases influenced them and apply these lessons to future choices.

BIBLIOGRAPHY

Oswald, M. E., & Grosjean, S. (2004). Confirmation Bias. In Cognitive Illusions: A Handbook on Fallacies and Biases in Thinking, Judgement and Memory.
Tversky, A., & Kahneman, D. (1973). Availability: A heuristic for judging frequency and probability. Cognitive Psychology.
Furnham, A., & Boo, H. C. (2011). A literature review of the anchoring effect. The Journal of Socio-Economics, 40(1), 35–42.
Moore, D. A., & Healy, P. J. (2008). The trouble with overconfidence. Psychological Review, 115(2), 502–517.
Baron, J., & Hershey, J. C. (1988). Outcome Bias in Decision Evaluation. Journal of Personality and Social Psychology, 54(4), 569–579.