Bias – The Decision Making Toolkit

The following is an excerpt from my book The Creator’s Handbook:

Classical economic models and political theories treat humans as rational outcomes optimizers. They assume that we either have perfect information or that we rationally engage the information that is available in order to make decisions. However, as the field of economics and political science started to focus on the psychology behind decisions, a new and more nuanced understanding of human decision-making has emerged. One in which our decisions can be best understood not by what we know or what our goals are, but rather by the biases we use to process information.

Bias has a very undeserved reputation as something problematic that must be eliminated. However, that ignores the important role bias has played in the iterative development of the human brain over last 2 million years. What we call biases are merely reflections of how the software that is our brain operates. And they allow us to create decision-making models much more adaptive and responsive to environmental change than all other mammals. Our technological accomplishments and ability to not just survive but thrive in virtually any of Earth’s many climates are a consequence of using biases to navigate within a chaotic universe.

From an objective view of modern society, many of our biases lead to irrational behaviors. TV Talking Heads often talk about people voting against their interests, and one can often observe highway drivers in a hurry weave through traffic but end up taking longer to reach their destination. However, biological evolution has never been a process of becoming more rational. It is instead a process of successful iterative adaptation to changes in the environment over long periods of time. An OODA loop of sorts that plays out each generation. From a biological point of view, biases have served an important role in helping humans not only adapt better than virtually all other mammals, but develop advantages that have grown into planetary supremacy – for better or for worse.

The major biases that shape our decision-making are:

1. Anchor bias – giving undue weight to the very first piece of information received
2. Availability bias – overestimating the importance or reliability of information that is most readily available
3. Bandwagon bias – adopting a belief simply because other people have that same belief
4. Blind-spot bias – unawareness of one’s own biases
5. Choice-supportive bias – rationalizing a poorly constructed decision
6. Clustering illusion – finding patterns in events that are actually just random
7. Confirmation bias – seeking out or accepting only information that confirms our existing beliefs
8. Conservatism bias – favoring prior evidence over new evidence regardless of the strength of new evidence
9. Information bias – tendency to seek additional information, even when it does not add value towards making a decision
10. Ostrich effect – ignoring information that is negative or threatens the ego
11. Outcome bias – judging a decision based on outcome and not on information available
12. Overconfidence bias – overestimation of one’s abilities
13. Placebo bias – an experience caused solely by the belief that the experience will happen
14. Recency bias – favoring newer information over older information
15. Salience bias – focusing on the most easily recognizable features of a thing or idea
16. Selection bias – expectations influencing perception more heavily than sensory data
17. Survivorship bias – judging an experience based only on information from those who succeeded
18. Zero-risk bias – evaluating options through the lens of what is lost in the event of failure
19. Sunk cost bias – favoring a previous, costly decision over a new alternative to avoid taking a loss

To read more, you can buy The Creator’s Handbook on in both paperback and on your favorite e-reader format