Cognitive Bias and how to overcome these biases.

Cognitive biases are heuristics and they really make sense.

Human brains have advanced for two hundred thousand years and, given radically different and rapidly changing setting, they function in an exact way today. Cognitive bias is closely related to human decision-making because people learn and develop predictable thinking patterns. While patterns are sometimes positive and reflect rational decision-making behaviour, other patterns lead to poor or suboptimal choices.

In the event that you need to consider each conceivable alternative when settling on a choice, it would most likely require some investment to settle on even the least difficult decision. As a result of the sheer complex nature of your general surroundings and the abundance of data available, it is vital now and then to depend on some psychological alternate routes (heuristics) that enable you to act rapidly. The World is immensely complex and people have never been besieged by so much data on a day by day premise. Bias can have critical impacts on innovation execution, in general, biases depend on our past encounters and ways of applying earlier information, especially in decision making. 

This makes a difference and clarifies why more seasoned group individuals tend to struggle in thinking divergently. The majority of the choices we make with an unmistakable personality are really constrained by heuristics known as cognitive biases and it is essential to figure out how to limit their pessimistic effects on development.

Extensively, cognitive biases can be divided into two kinds: data processing and emotional inclinations. Data processing biases are factual, quantitative blunders of judgment that are anything and simple to fix with new data. Emotional biases are a lot harder to change or fix as they depend on dispositions and sentiments, deliberately and unknowingly

The two sorts can have implications when evaluating new possibly creative ideas to further repeat and create in light of the fact that they work to keep you inside your usual range of familiarity of what is as of now de-risked and known. The hidden conviction that you'll be more secure, increasingly safe and progressively all right with less vulnerability and risk overwhelms decision making.

Below is the description of various Cognitive Bias and how to overcome these biases.

ANCHORING BIAS

Imagine you're at a store. Following a moment of window shopping, you're attracted to an extravagant shirt. You check its price, and since you see it's very costly – Euro 150 – you set it back on the rack. Nonetheless, resolved to discover something comparable and less expensive, you proceed with your pursuit, just to locate that other shirt costs go-between Euro 500-850. What do you do straightaway? You return to your first find and get it. 

Know why?

Because of a cognitive bias called anchoring.

In the above example, the main anchor was the $150 price, which helped you make a value correlation and reason that the $150 shirt a steal! The Anchoring Effect can backfire if there's a crazy difference between the original and discounted cost.

Outsmart the Anchoring Bias

Given the potential destructions related to the anchoring bias, it is imperative to create techniques for exploring around these.

1.   Recognise the bias

Being able to identify your bias is the initial step. Know the shortcomings of your brain and envision prejudiced judgment. On the off chance, if you approach every situation with alertness, regularly pondering over your judgment, you are more averse to fall into the traps of your own psyche.

2.   Take time to decide

The second step includes slowing your decision-making process and looking for additional information. When settling for a car or a house, it can be logical to take your time. Try doing some research online get to know the best available rates in the market before visiting the store? Carefully compare all the different deals the store has to offer.

3.   Drop your own anchor

When you know about the ground-breaking impact that anchoring can have on our judgment, you can utilize this information for your own advantage. For example, it can be handy to do your homework on the average sales price for the second-hand car model you are keen in and use this as an anchor to guide your preferences whether or not to seal the deal. Furthermore, during open negotiations, it is often beneficial to make the first offer. This way you have an added advantage at your disposal and set the baseline for the bargain that is to follow.

CONFIRMATION BIAS

Confirmation Bias is a term from the field of subjective brain research that portrays how individuals normally support data that affirms their preconceived thoughts. Confirmation bias is a cognitive process which is come by default to everyone. People only seek out information that confirms their existing opinions and ignore contrary information that refutes them, they may slant towards the choices dependent on their own psychological predispositions. Confirmation bias is so powerful that, in any event, when there is solid proof demonstrating that our convictions aren't right, and even when sticking to those convictions costs us cash, we will, in general, adhere to our inaccurate decisions.

Overcoming Confirmation Bias

Seek Contrasting Advice: The first step to overcoming confirmation bias is to have an awareness that it exists and have an open mind towards any event which occur. Once a person has gathered information that assist their thoughts and beliefs about a particular event, they should also pursue alternative ideas that challenge their point of view. It is great practice to make a list of the speculation's pros and cons and reassess it with a receptive outlook.

Avoid Confirming Questions: People should not ask questions that confirm their conclusions about an investment. As Warren Buffett famously put it, "What the human being is best at doing is interpreting all new information so that their prior conclusions remain intact." 

As you practice thoughtfulness you'll see that your perspective normally widens. You are bound to have the tolerance to hear out contentions, in any event, when they negate your very own convictions, be progressively open to new encounters, and be slanted towards increasingly keen basic leadership. However, remember that even the most exacting professional could surrender to confirmation bias, so stay open to new thoughts and attempt to perceive when confirmation bias may be available.

STATUS QUO BIAS

Status Quo bias alludes to the process of inclining toward that one's condition and circumstance stay as they already are. The phenomenon is most effective in the domain of decision-making: when we decide, we will in general favour the more familiar decision over the less recognizable.

Below of these explanations are considered irrational reasons for preferring the status quo.

Loss Aversion

Studies have demonstrated that when people decide, they gauge the potential for loss more intensely than the potential for gain. Consequently, when taking a decision, they centre on what they could lose by deserting the status quo than on what they could pick up by taking a leap at something new.

Sunk Costs

The sunk cost deception refers to the way that an individual will regularly keep on investing assets (time, cash, or energy) into a particular project basically in light of the fact that they have just invested in that venture, regardless of whether that try has not proved to be advantageous.

Mere Exposure effect

The mere exposure effect expresses that individuals will in general incline toward something they've been presented previously. By definition, we are presented to business as usual (status quo) more than we are presented to whatever isn't the norm. As indicated by the mere exposure effect, that inclination itself makes a preference for the Status Quo.

Example of Status Quo Bias:

When offered a few dish alternatives for lunch, people frequently pick a dish they have eaten previously. This marvel is called regret avoidance: looking to evade a potential deplorable encounter (picking another dish and loathing it), people select to stay with the status quo (the dish with which they are as of now well-known).

How to overcome Status Quo Bias

Status quo bias is our propensity to, incline toward the present situation instead of rolling out an improvement, while making a decision. You can represent this common inclination by reversing the circumstance and the direction of change. Originates from a mixture of human propensities. A characteristic dread of progress, our inclination for commonality, and sluggishness, all contribute towards it.

For example, instead of wondering whether you should spend a Euro for a chocolate bar, you could ask yourself whether you'd be willing to receive a Euro for skipping a chocolate bar for the day. This quick reversal is a simpler version of the Reversal Test, a mental tool philosophers use to account for status quo bias.

THE OVERCONFIDENCE BIAS

It's the state at which an individual is absolutely very persuaded that they are better (somehow or another, shape, or structure) than the individuals around them. You may see the overconfidence bias in your manager, who demands that everybody pursue his method for getting things done, because that it's absolutely the most ideal method for getting things done (clue: it's definitely not). You may see it in relatives. You may even observe it in yourself.

Overestimation: 

This happens when you overestimate your genuine capacities, execution, the measure of control you have, or your possibility of progress.

Over placement: 

This is tied in with accepting that your position is higher than those of the individuals around you.

Over precision

This happens when you're too certain that you know reality. This is the most troublesome kind of overconfidence to quantify and understand.

How we can avoid Overconfidence Bias

Stay humble.

Arrogance is developed when we experience a ton of achievement. As we achieve an ever increasing number of things, it's easy to feel fruitful and to accept that we're doing everything right. But it's important to remember that we're capable of making flaws. Hence In all aspects of life humility is especially important. Humility unites you with your co-workers and employees and makes you a better person or leader.

Do your research.

Research is critical to ensure you don't keep running into headaches down the line. Circumstances can change whenever, so it's smarter to be set up with the all the data you may need to make a decision.

Be pragmatic about your commitments.

It's enticing to take on heaps of responsibilities to show individuals that you're stunning and that you can do stuff they can't. Tragically, however, taking on an excess of responsibilities is devastating.

Manage your time prudently.

We have a window of around three hours in the start of the day when we're extremely focused. We should make the most of these initial three hours by beginning with a short planning session and illustrating what you need to achieve that day. At that point, remain proactive.

Accept criticism, even if it hurts. 

We're all human here. So we're continually going to commit errors, regardless of how frantically we attempt to stay away from them. By tuning in to productive analysis, we can gain from our mistakes and create changes in the manner we work. Criticism can enable us to increase new clients and bonds better associations with our supervisors and colleagues. It holds us within proper limits.

Confront your beliefs.

A team made totally out of "yes men" can be hazardous. At the point when individuals concur with all that you do and say (regardless of whether it's out of dread or wonderment), innovation often takes a back seat, and you stop making progress. New thoughts and sound discussions open our points of view and let us see better approaches for getting things done. 

Devil's advocates are frustrating, however they drive you out of your comfort zone and power you to Devil's advocates are frustrating the techniques you utilize. With their assistance, you may find better or increasingly effective strategies for getting things done, or improve the old ways.

Ponder over your mistakes and shortcomings. 

Disappointments suck, yet they're extraordinary stepping stones. Recognizing our mistakes instead of putting the fault on another person causes us to clear our mind of any pride that may cloud our judgment.

References:

https://sulis.ul.ie/access/content/group/78dbf1d3-c21a-4c72-9348-0925c01a5a01/Week%204/Hidden%20Traps%20of%20decision%20Making%20HBR%202006.pdf

https://www.verywellmind.com/cognitive-biases-distort-thinking-2794763

https://www.businessinsider.com/cognitive-biases-2015-10?r=US&IR=T#the-clustering-illusion-happens-when-we-see-trends-in-random-events-that-happen-close-together-7