The human brain is a very complex and powerful biological mechanism as simulating a single second of human brain activity typically would require about 90,000 + processors. Despite its formidable capabilities, the human brain has many shortcomings! One such fault is the tendency toward cognitive biases, in which a perception of a situation, versus the facts, may take the lead in forming decisions. The outcomes of these subliminal blinders witness in the many instances of negative and positive bias that significantly influence corporate strategic and tactical decision-making.
We are often not aware or want to honestly admit to the cognitive bias supporting our many daily decision-making events. But no individual is immune to prejudice and favoritism (good or bad) because it would be difficult to function without them effectively!
Civilization has progressed over two hundred thousand years, and it continues to operate generally in much the same manner today, notwithstanding our hugely changed and fast-shifting milieu. The global village is infinitely more complex, and the population is continually barraged with information from an array of communication channels daily. In this modern environment, individuals cannot effectively process and absorb all the information around us. Therefore we must resort to the use of cognitive bias associated ‘mental shortcuts or heuristics’ to aid in our decision-making.
Cognitive Bias: Definition
Cognitive Bias is a systematic pattern of deviation from norm or rationality in human judgment. Individuals create their subjective social reality from their perception of the input. In summary, a cognitive bias is an error in human reasoning, evaluating, remembering, or another cognitive event, often a result of holding onto one’s preferences and beliefs notwithstanding receipt of opposing information.
An individual’s construction of social reality, not the objective input, may dictate their behavior in the social world. Thus, cognitive biases may sometimes lead to perceptual distortion, inaccurate judgment, illogical interpretation, or what is broadly called irrationality.
Some cognitive biases are adaptive. Cognitive biases may lead to more effective actions in a given context and enable quicker decisions when timeliness is more valuable than accuracy, as shown in heuristics. Other cognitive biases are as by-products of human processing limitations, resulting from a lack of appropriate mental mechanisms (bounded rationality), or directly from a limited capacity for information processing.
“New insights fail to get put into practice because they conflict with deeply held internal images of how the world works … images that limit us to familiar ways of thinking and acting.”
Organizational Change Programs & Cognitive Biases
Corporate change programs encounter disruptions resulting from employee mood swings and cognitive biases. These unsettling situations distort the employee’s ability to correctly reason, evaluate impediments, and make the right decisions.
Different cognitive biases are exhibited at each phase of a change journey, creating a sequence of moods and mindsets as change unfolds. Managers have the responsibility to manage their employees change expectations to plan and help minimize personal biases.
Cognitive Bias: Examples
Cognitive biases are intuitive leaps that human minds make that are our basically ‘gut reactions’ and things we “know,” though we’re not sure how we know them! Scientists believe they are a relic of evolution: little shortcuts or heuristics that are programmed into our minds to help us process information and conditions on a more timely basis. But they sometimes lead us just as quickly to the wrong conclusions.
The most common cognitive biases that may lead to bad decision-making, including the idea that the more information you have, the more likely you are to make the smartest choice are as follows.
Anchoring Bias is the universal human tendency to rely too heavily on the initial information identified (the “anchor”) when making decisions. During decision-making, anchoring generally occurs when individuals use an initial and imprecise element of information to make judgments. Once an anchor is recognized, other discriminations are adjusting away from the anchor if there is a bias toward interpreting data within the anchor’s sphere.
Ambiguity Bias effect is a cognitive bias where decision-making is a lack of information, or “ambiguity.” The impact of this bias implies that people tend to select options for which the probability of a favorable outcome is known, over an opportunity for which the likelihood of a pleasant or positive outcome is unknown.
Confirmation Bias is the human tendency to search, interpret, favor, and recall information in a way that confirms one’s preexisting beliefs or hypotheses. It is a type of cognitive bias condition and a systematic error of inductive reasoning. People display this bias type when they gather or remember information selectively, or when they interpret it in a biased way. The effect is stronger for emotionally charged issues and deeply entrenched beliefs.
Confirmation Bias is a variation of the more general tendency of apophenia. In psychology, apophenia is the perception of connections and meaningfulness in unrelated things. Apophenia can be a regular and routine phenomenon or an abnormal one, as in paranoid schizophrenia when the patient sees ominous patterns where there are none.
Loss Aversion Bias in cognitive psychology condition and decision theory that refers to people’s tendency to prefer avoiding losses versus acquiring equivalent gains: it is better not to lose $100 than to find $100. What distinguishes loss aversion from risk aversion is that the utility of a financial incentive that depends on what was previously experienced or was expected to happen.
Negativity Bias refers to the condition that even when of equal intensity, things of a more negative nature (unfriendly or hostile thoughts and emotions, social interactions) harmful/traumatic events will have a more significant impact on one’s psychological state than neutral or positive things. Something very positive will typically have less of a bearing on an individual’s behavior and cognition than something equally emotional but negative.
Normalcy Bias is a belief people hold when facing a disaster. It triggers people to misjudge the likelihood of a failure and its potential effects because people believe that things will always function the way things normally or traditionally worked. This condition may result in situations where people fail to prepare themselves for disasters appropriately, and on a larger scale, the failure of governments to include the populace in its disaster preparations.
Optimism Bias, also known as unrealistic or comparative optimism, is a cognitive bias that results in an individual believing that they are at a lesser risk of experiencing an adverse event compared to others. Optimism Bias is a universal human bias and transcends gender, race, nationality, and age.
Reducing Cognitive Bias in the Workplace
Employees can reduce their personal biases with continually:
- Recognizing bias in oneself and others: Encourage and mitigate.
- Contributing less bias in all face-to-face and social media interactions and decisions: Remove bias source and use.
- Using clear and unbiased language: Eliminate jargon, acronyms, and high-level ‘yes and no’ responses.
- Reducing bias in research and analysis: Empower active information collaboration and consensus.