Cognitive biases are errors in judgments when we make decisions.
Human beings have to react quickly to their environment. This involves a rapid processing of information received from all around us. The senses continually bombard our brain with this information. As such, in order to make reasonable decisions, our brain has to rely on our previous experiences. Therefore, to help assimilate this information, sometimes we take mental shortcuts. The mental shortcuts are heuristics. The problem is that occasionally they provide errors in judgments. These errors are cognitive biases.
There are all kinds of different cognitive biases.
Here are 10 Cognitive Biases that secretly affect you:
Studies show that we tend to rely on the first piece of information we receive when it comes to decision-making. This is the ‘anchor’. An example of anchoring is the starting price for a house auction. This sets the price for the whole bidding.
2. Decision Fatigue
This is one of the more serious cognitive biases. When we are tired, our decision-making ability is affected.
One study revealed that even experienced judges are prone to decision fatigue. The judges decisions on parole were examined. The results showed that if a prisoner had their case heard in the morning, they were more likely to be granted parole. The judges rejected parole in the afternoon when they were tired.
3. Hot-Cold Empathy Gap
The third of our cognitive biases relates to empathy. Research suggests that we have trouble putting ourselves in other people’s shoes. We tend to project what we are feeling onto other people. This is particularly true when we are in extreme emotional states, hence the ‘hot/cold’ part.
So, for instance, if I am really happy and having a great time and you are cross with me, I will have a hard time understanding how you are feeling.
4. Framing Effect
Context is important in all the things we do, and framing is a way of putting a situation into context. For example, an advert for a new medicine states ‘Affective 80% of the time’. Or it could state that it doesn’t work for 20% of people. We tend to prefer the positive framing rather than the negative.
“The stumbling block isn’t the certainty effect per se. It’s the way that smart people are influenced by mere words, by the way the choices are framed.” ― William Poundstone – ‘Priceless: The Myth of Fair Value’
5. Gambler’s Fallacy
We have a tendency to think that if something happens over and over again, it won’t keep happening. The rules of chance simply won’t allow it to. Likewise, if something doesn’t happen, then we think it should happen shortly.
An example of this is if you are playing roulette and the ball has landed on red for the last 10 spins. Logic dictates it should now land on black. The fact is that every spin of the wheel has a 50/50 chance of red or black, despite what has previously happened.
6. Hedonic Adaptation
Can money buy you happiness? It’s that age-old question that many of us would say yes to. But the evidence is contradictory. In fact, studies show that we tend to return to our original levels of happiness. This is whether we experience a major positive or negative life event.
One study examined levels of happiness between ‘big win’ lottery winners and accident victims. These victims had sustained life-changing injuries (paraplegics and quadriplegics). The interesting thing is that there was hardly any difference between the happiness levels of the lottery winners and the accident victims. Even more surprising was that the accident victims found more happiness recalling past events than the lottery winners.
7. Less-Is-Better Effect
Which one would you value more? A $45 scarf or a coat that cost $55? The coat obviously costs more and is of a higher value. But research shows it all depends on the context.
Consider a scenario in which you are going to study abroad and your friend has bought you a goodbye gift.
These are the two scenarios where your friend buys you a silk scarf or a wool coat:
- The silk scarf scenario. The store carries a selection of scarves; the worst one costs $1 and the best one costs $50. Your friend buys you one costing $45.
- The coat scenario. The store has a selection of woolen coats; the worst one costs $50 and the best costs $500. Your friend buys you the $50 one.
One present is clearly higher value but the context of the purchase gives the lower value item higher status.
8. Peak-End Rule
Studies show that we are more likely to remember an experience depending on how we feel at the peak of it or at the end. The peak is the most intense part of the event.
What’s more interesting is that it doesn’t matter how long the experience lasts, or whether it’s a happy or sad one. The same rules apply. One study revealed that during colonoscopy procedures, patients rated their pain and discomfort at the worst peak and at the end. This was the case regardless of the length of the procedure or how long the pain lasted for.
This is a trick I’m sure many supermarkets and restaurants use to entice us to spend more money. Priming is a subconscious reaction to one stimulus, such as words, smells or colors which then elicits a response. For instance, if we see the word DOCTOR, we recognized the word NURSE rather than, say, BUTTER.
One study tested to see whether music can influence our choice of wine. For two weeks, one restaurant played German and French music on alternate days. The amount of German or French wine purchased was then measured. You can probably guess that on the nights German music played more German wine was purchased and vice versa.
Even more interesting was that the style and tone of the music also affected how the diners described the taste of the wine. All diners drank the same wine, but when Carmina Burana played in the background, the wine was described as ‘heavy and powerful’. In contrast, when Waltz of the Flowers played the wine was ‘refined and subtle’.
Finally, the last one of our cognitive biases is all about things that are hard to acquire. For instance, gents, have you ever lusted after that one-off luxury sports cars? Ladies, how about those elusive designer handbags? Sorry if I’m being sexist. I’m trying to get across how some of us feel about acquiring an item when it is rare.
Research shows that the more difficult an item is to obtain, the more we want it. In fact, the rarer it is, the more valuable it becomes. Why do we think this? Because we believe that something that’s hard to acquire has to be more exclusive than common things. Rare things are linked to quality whereas quantity is linked to mass production.