14 Biases That Affect How We Make Decisions

Bias is disproportionate weight in favour of or against an idea or thing, usually in a way that is closed-minded, prejudicial, or unfair. Biases can be innate or learned. As much as we like to think we’re open-minded and impartial, however there are up to 188 different biases which are continually influencing us – affecting our thinking, behaviours and decisions. While some are openly apparent, many biases are unconscious; we may have no idea you’re under the influence of a bias that’s distorting our way of thinking. In order to make better everyday decisions; we make up to 35,000 decisions every day. This ranges from creating inclusive cultures where everyone is represented, to choosing the right word when writing a document. In the big and small decisions, we encounter, we need to be in control of our biases. Here are just fourteen common biases which affect our decision making.

1. The Dunning-Kruger Effect

This effect refers to a cognitive bias in which individuals with a low level of knowledge in a particular subject mistakenly assess their knowledge or ability as greater than it is. In this sense, the more you know, the less confident you're likely to be – not out of lacking knowledge, but due to caution. On the other hand, if we know only a little about something, we see it simplistically – biasing you to believe that the concept is easier to comprehend than it may be.

2. Confirmation Bias

We all favour ideas that confirm our existing beliefs and what we think we know. Likewise, when we conduct research, we all suffer from trying to find sources that justify what we believe about the subject.  Confirmation bias is based on finding that people tend to listen more often to information that confirms the beliefs they already have. Through this bias, people tend to favour information that confirms their previously held beliefs.is, we must overcome confirmation bias and consider both sides (or, if there are more than two, all sides) of the story. Remember, we are cognitively lazy – we don’t like changing our knowledge (schema) structures and how we think about things.

3. Self-Serving Bias

Ever fail an exam because your teacher hates you? Ever go in the following week and ace the next one because you studied extra hard despite that teacher? Congratulations, you’ve engaged the self-serving bias! We attribute successes and positive outcomes to our doing, basking in our own glory when things go right; but, when we face failure and negative outcomes, we tend to attribute these events to other people or contextual factors outside ourselves.

4. The Curse of Knowledge and Hindsight Bias

The False Consensus Effect, is once you (truly) understand a new piece of information, that piece of information is now available to you and often becomes seemingly obvious. It might be easy to forget that there was ever a time you didn’t know this information and so, you assume that others, like yourself, also know this information: the Curse of Knowledge. However, it is often an unfair assumption that others share the same knowledge. The Hindsight Bias is like the Curse of Knowledge in that once we have information about an event, it is involved the tendency of people to see events, even random ones, as more predictable than they are.

5. Optimism/Pessimism Bias

As you probably guessed from the name, we have a tendency to overestimate the likelihood of positive outcomes, particularly if we are in good humour, and to overestimate the likelihood of negative outcomes if we are feeling down or have a pessimistic attitude. In either the case of optimism or pessimism, be aware that emotions can make thinking irrational.

6. The Sunk Cost Fallacy

Though labelled a fallacy, the ‘Sunk Cost’ is just as much in tune with bias as faulty thinking, given the way we think in terms of winning, losing and ‘breaking even’. For example, we generally believe that when we put something in, we should get something out – whether it’s effort, time or money. With that, sometimes we lose… and that’s it – we get nothing in return. A sunk cost refers to something lost that cannot be recovered. Our aversion to losing makes us irrationally cling to the idea of ‘regaining’, even though it has already been lost [and hopefully more] even though, rationally, we should consider the initial bet as out-and-out lost.

7. Negativity Bias

Negativity Bias is not totally separate from Pessimism Bias, but it is subtly and importantly distinct. In fact, it works according to similar mechanics as the Sunk Cost Fallacy in that it reflects our profound aversion to losing. We like to win, but we hate to lose even more. So, when we make a decision, we generally think in terms of outcomes – either positive or negative. The bias comes into play when we irrationally weigh the potential for a negative outcome as more important than that of the positive outcome.

8. The Decline Bias (a.k.a. Declinism)

Declinism refers to bias in favour of the past over and above ‘how things are going’. Similarly, you might know a member of an older generation who prefaces grievances with ‘Well, back in my day’ before following up with how things are supposedly getting worse. The Decline Bias may result from change, and we all don’t like change. People like their worlds to make sense, they like things wrapped up in nice, neat little packages. Our world is easier to engage when things make sense to us. When things change, so must the way in which we think about them; and because we are cognitively lazy, we try our best to avoid changing our thought processes.

9. The Backfire Effect

The Backfire Effect refers to the strengthening of a belief even after it has been challenged. This effect may may work based on the same foundation as Declinism, in that we do not like change. It is also similar to Negativity Bias, in that we wish to avoid losing and other negative outcomes – in this case, one’s idea is being challenged or rejected (i.e. perceived as being made out to be ‘wrong’) and thus, they may hold on tighter to the idea than they had before. However, there are caveats to the Backfire Effect – for example, we also tend to abandon a belief if there's enough evidence against it with respect to specific facts.

10. The Fundamental Attribution Error

The Fundamental Attribution Error is similar to the Self-Serving Bias, in that we look for contextual excuses for our failures, but generally blame other people or their characteristics for their failures. It also may stem from the Availability Heuristic in that we make judgments based only on the information we have available at hand.

11. In-Group Bias

As we have seen through consideration of the Self-Serving Bias and the Fundamental Attribution Error, we tend to be relatively kind when making judgments about ourselves. Simply, In-Group Bias refers to the unfair favouring of someone from one’s own group. We might think that we are unbiased, impartial and fair, but we all succumb to this bias, having evolved to be this way. That is, from an evolutionary perspective, this bias can be considered an advantage – favouring and protecting those similar to you, particularly with respect to kinship and the promotion of one’s own line.

12. The Forer Effect (a.k.a. The Barnum Effect)

As in the case of Declinism, to better understand the Forer Effect (commonly known as the Barnum Effect), it’s helpful to acknowledge that people like their world to make sense. If it didn’t, we would have no pre-existing routine to fall back on and we’d have to think harder to contextualise new information. With that, if there are gaps in our thinking of how we understand things, we will try to fill those gaps in with what we intuitively think makes sense, subsequently reinforcing our existing schema(s). As our minds make such connections to consolidate our own personal understanding of the world, it is easy to see how people can tend to process vague information and interpret it in a manner that makes it seem personal and specific to them. Given our egocentric nature (along with our desire for nice, neat little packages and patterns), when we process vague information, we hold on to what we deem meaningful to us and discard what is not. Simply, we better process information we think is specifically tailored to us, regardless of ambiguity.

13. Misinformation Effect and False Memories

Our memories of certain events also tend to be heavily influenced by things that happened after the actual event itself, a phenomenon known as the misinformation effect. The misinformation effect illustrates just how easily our memories can be influenced and raises concerns about the reliability of memory, particularly in the case of eyewitness memories used to determine criminal guilt. 

14. The Anchoring Bias

This is the tendency to rely too heavily on the very first piece of information we learn, or the first sound we hear, this is a phenomenon referred to as the anchoring bias or anchoring effect. This can have a serious impact on the decision they we end up making. For example, the first number voiced during a price negotiation typically becomes the anchoring point from which all further negotiations are based. So, shall I finish here? Yes, 14!