Cognitive Bias As the Source of Error 14

We are now passing the speed of thought.

There's another kind of mistake, an error in thought organization and wiring themselves, not in formal logic and evidence submitted. This class of errors, uncovered in 1972, is called “cognitive bias.” Frankly, it is a group of mistakes that are rampant in board rooms, government conference rooms, academia, and, especially, in the social sciences. Hiding in the descriptions below are the mistakes the Honolulu symphony board made that paved the way to bankruptcy. Of this entire discussion, “confirmation bias” is the 800 pound gorilla, the beast that keeps eating and smashing everything.

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Cognitive Bias

A cognitive bias is the human tendency to make systematic errors in certain circumstances based on cognitive factors rather than evidence. Such biases can result from information-processing shortcuts called heuristics. They include errors in statistical judgment, social attribution, and memory. Cognitive biases are a common outcome of human thought, and often drastically skew the reliability of anecdotal and legal evidence. It is a phenomenon studied in cognitive science and social psychology.

Overview

Bias arises from various processes that are sometimes difficult to distinguish. These include information-processing shortcuts (heuristics), motivational factors and social influence.^{[citation needed]}

The notion of cognitive biases was introduced by Amos Tversky and Daniel Kahneman in 1972^[1] and grew out of their experience of people's innumeracy, or inability to reason intuitively with the greater orders of magnitude. They and their colleagues demonstrated several replicable ways in which human judgments and decisions differ from rational choice theory. They explained these differences in terms of heuristics, rules which are simple for the brain to compute but introduce systematic errors.^[1] For instance the Availability heuristic, when the ease with which something comes to mind is used to indicate how often (or how recently) it has been encountered.

These experiments grew into the heuristics and biases research program which spread beyond academic psychology into other disciplines including medicine and political science.^[2] It was a major factor in the emergence of behavioral economics, earning Kahneman a Nobel Prize in 2002.^{[citation needed]} Tversky and Kahneman developed prospect theory as a more realistic alternative to rational choice theory.^{[citation needed]}

Other biases have been demonstrated in separate experiments, such as the Confirmation bias demonstrated by Peter C. Wason.

....Practical significance

Many social institutions rely on individuals to make rational judgments. A fair jury trial, for example, requires that the jury ignore irrelevant features of the case, weigh the relevant features appropriately, consider different possibilities open-mindedly and resist fallacies such as appeal to emotion. The various biases demonstrated in these psychological experiments suggest that people will frequently fail to do all these things. However, they fail to do so in systematric, directional ways that are predictable.

^{http://en.wikipedia.org/wiki/Cognitive_bias}

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List of Cognitive Biases


Many of these biases are studied for how they affect belief formation, business decisions, and scientific research.

• Anchoring – the common human tendency to rely too heavily, or "anchor," on one trait or piece of information when making decisions.
• Bandwagon effect – the tendency to do (or believe) things because many other people do (or believe) the same. Related to groupthink and herd behavior.
• Bias blind spot – the tendency to see oneself as less biased than other people.[2]
• Choice-supportive bias – the tendency to remember one's choices as better than they actually were.
• Confirmation bias – the tendency to search for or interpret information in a way that confirms one's preconceptions.[3]
• Congruence bias – the tendency to test hypotheses exclusively through direct testing, in contrast to tests of possible alternative hypotheses.
• Contrast effect – the enhancement or diminishing of a weight or other measurement when compared with a recently observed contrasting object.[4]
• Denomination effect – the tendency to spend more money when it is denominated in small amounts (e.g. coins) rather than large amounts (e.g. bills).[5]
• Distinction bias – the tendency to view two options as more dissimilar when evaluating them simultaneously than when evaluating them separately.[6]
• Endowment effect – "the fact that people often demand much more to give up an object than they would be willing to pay to acquire it".[7]
• Experimenter's or Expectation bias – the tendency for experimenters to believe, certify, and publish data that agree with their expectations for the outcome of an experiment, and to disbelieve, discard, or downgrade the corresponding weightings for data that appear to conflict with those expectations.[8]
• Extraordinarity bias – the tendency to value an object more than others in the same category as a result of an extraordinarity of that object that does not, in itself, change the value.[citation needed]
• Focusing effect – the tendency to place too much importance on one aspect of an event; causes error in accurately predicting the utility of a future outcome.[9]
• Framing effect – drawing different conclusions from the same information, depending on how that information is presented.
• Hyperbolic discounting – the tendency for people to have a stronger preference for more immediate payoffs relative to later payoffs, where the tendency increases the closer to the present both payoffs are.[10]
• Illusion of control – the tendency to overestimate one's degree of influence over other external events.[11]
• Impact bias – the tendency to overestimate the length or the intensity of the impact of future feeling states.[12]
• Information bias – the tendency to seek information even when it cannot affect action.[13]
• Interloper effect – the tendency to value third party consultation as objective, confirming, and without motive. Also consultation paradox, the conclusion that solutions proposed by existing personnel within an organization are less likely to receive support than from those recruited for that purpose.
• Irrational escalation – the phenomenon where people justify increased investment in a decision, based on the cumulative prior investment, despite new evidence suggesting that the decision was probably wrong.
• Loss aversion – "the disutility of giving up an object is greater than the utility associated with acquiring it".[14] (see also Sunk cost effects and Endowment effect).
• Mere exposure effect – the tendency to express undue liking for things merely because of familiarity with them.[15]
• Money illusion – the tendency to concentrate on the nominal (face value) of money rather than its value in terms of purchasing power.[16]
• Moral credential effect – the tendency of a track record of non-prejudice to increase subsequent prejudice.
• Negativity bias – the tendency to pay more attention and give more weight to negative than positive experiences or other kinds of information.
• Neglect of probability – the tendency to completely disregard probability when making a decision under uncertainty.[17]
• Normalcy bias – the refusal to plan for, or react to, a disaster which has never happened before.
• Omission bias – the tendency to judge harmful actions as worse, or less moral, than equally harmful omissions (inactions).[18]
• Outcome bias – the tendency to judge a decision by its eventual outcome instead of based on the quality of the decision at the time it was made.
• Planning fallacy – the tendency to underestimate task-completion times.[12]
• Post-purchase rationalization – the tendency to persuade oneself through rational argument that a purchase was a good value.
• Pseudocertainty effect – the tendency to make risk-averse choices if the expected outcome is positive, but make risk-seeking choices to avoid negative outcomes.[19]
• Reactance – the urge to do the opposite of what someone wants you to do out of a need to resist a perceived attempt to constrain your freedom of choice.
• Restraint bias – the tendency to overestimate one's ability to show restraint in the face of temptation.
• Selective perception – the tendency for expectations to affect perception.
• Semmelweis reflex – the tendency to reject new evidence that contradicts an established paradigm.[20]
• Status quo bias – the tendency to like things to stay relatively the same (see also loss aversion, endowment effect, and system justification).[21][22]
• Wishful thinking – the formation of beliefs and the making of decisions according to what is pleasing to imagine instead of by appeal to evidence or rationality.[23]
• Zero-risk bias – preference for reducing a small risk to zero over a greater reduction in a larger risk.

Biases in probability and belief

Many of these biases are often studied for how they affect business and economic decisions and how they affect experimental research.

• Ambiguity effect – the tendency to avoid options for which missing information makes the probability seem "unknown."[24]
• Anchoring effect – the tendency to rely too heavily, or "anchor," on a past reference or on one trait or piece of information when making decisions (also called "insufficient adjustment").
• Attentional bias – the tendency to neglect relevant data when making judgments of a correlation or association.
• Authority bias – the tendency to value an ambiguous stimulus (e.g., an art performance) according to the opinion of someone who is seen as an authority on the topic.
• Availability heuristic – estimating what is more likely by what is more available in memory, which is biased toward vivid, unusual, or emotionally charged examples.
• Availability cascade – a self-reinforcing process in which a collective belief gains more and more plausibility through its increasing repetition in public discourse (or "repeat something long enough and it will become true").
• Base rate neglect' or Base rate fallacy – the tendency to base judgments on specifics, ignoring general statistical information.[25]
• Belief bias – an effect where someone's evaluation of the logical strength of an argument is biased by the believability of the conclusion.[26]
• Clustering illusion – the tendency to see patterns where actually none exist.
• Capability bias – the tendency to believe that the closer average performance is to a target, the tighter the distribution of the data set.
• Conjunction fallacy – the tendency to assume that specific conditions are more probable than general ones.[27]
• Gambler's fallacy – the tendency to think that future probabilities are altered by past events, when in reality they are unchanged. Results from an erroneous conceptualization of the Law of large numbers. For example, "I've flipped heads with this coin five times consecutively, so the chance of tails coming out on the sixth flip is much greater than heads."
• Hindsight bias – sometimes called the "I-knew-it-all-along" effect, the tendency to see past events as being predictable.[28]
• Illusory correlation – inaccurately perceiving a relationship between two events, either because of prejudice or selective processing of information.[29]
• Observer-expectancy effect – when a researcher expects a given result and therefore unconsciously manipulates an experiment or misinterprets data in order to find it (see also subject-expectancy effect).
• Optimism bias – the tendency to be over-optimistic about the outcome of planned actions.[30]
• Ostrich effect – ignoring an obvious (negative) situation.
• Overconfidence effect – excessive confidence in one's own answers to questions. For example, for certain types of questions, answers that people rate as "99% certain" turn out to be wrong 40% of the time.[31][32]
• Positive outcome bias – the tendency of one to overestimate the probability of a favorable outcome coming to pass in a given situation (see also wishful thinking, optimism bias, and valence effect).
• Pareidolia – a vague and random stimulus (often an image or sound) is perceived as significant, e.g., seeing images of animals or faces in clouds, the man in the moon, and hearing hidden messages on records played in reverse.
• Pessimism bias – the tendency for depressed people to be over-pessimistic about the outcome of planned actions.
• Primacy effect – the tendency to weigh initial events more than subsequent events.[33]
• Recency effect – the tendency to weigh recent events more than earlier events (see also peak-end rule).
• Disregard of regression toward the mean – the tendency to expect extreme performance to continue.
• Stereotyping – expecting a member of a group to have certain characteristics without having actual information about that individual.
• Subadditivity effect – the tendency to judge probability of the whole to be less than the probabilities of the parts.
• Subjective validation – perception that something is true if a subject's belief demands it to be true. Also assigns perceived connections between coincidences.
• Well travelled road effect – underestimation of the duration taken to traverse oft-traveled routes and over-estimate the duration taken to traverse less familiar routes.

Social biases

Most of these biases are labeled as attributional biases.

• Actor–observer bias – the tendency for explanations of other individuals' behaviors to overemphasize the influence of their personality and underemphasize the influence of their situation (see also Fundamental attribution error). However, this is coupled with the opposite tendency for the self in that explanations for our own behaviors overemphasize the influence of our situation and underemphasize the influence of our own personality.
• Dunning–Kruger effect – a two-fold bias. On one hand the lack of metacognitive ability deludes people, who overrate their capabilities. On the other hand, skilled people underrate their abilities, as they assume the others have a similar understanding.[citation needed]
• Egocentric bias – occurs when people claim more responsibility for themselves for the results of a joint action than an outside observer would.
• Forer effect (aka Barnum effect) – the tendency to give high accuracy ratings to descriptions of their personality that supposedly are tailored specifically for them, but are in fact vague and general enough to apply to a wide range of people. For example, horoscopes.
• False consensus effect – the tendency for people to overestimate the degree to which others agree with them.[34]
• Fundamental attribution error – the tendency for people to over-emphasize personality-based explanations for behaviors observed in others while under-emphasizing the role and power of situational influences on the same behavior (see also actor-observer bias, group attribution error, positivity effect, and negativity effect).[35]
• Halo effect – the tendency for a person's positive or negative traits to "spill over" from one area of their personality to another in others' perceptions of them (see also physical attractiveness stereotype).[36]
• Herd instinct – common tendency to adopt the opinions and follow the behaviors of the majority to feel safer and to avoid conflict.
• Illusion of asymmetric insight – people perceive their knowledge of their peers to surpass their peers' knowledge of them.[37]
• Illusion of transparency – people overestimate others' ability to know them, and they also overestimate their ability to know others.
• Illusory superiority – overestimating one's desirable qualities, and underestimating undesirable qualities, relative to other people. (Also known as "Lake Wobegon effect," "better-than-average effect," or "superiority bias").[38]
• Ingroup bias – the tendency for people to give preferential treatment to others they perceive to be members of their own groups.
• Just-world phenomenon – the tendency for people to believe that the world is just and therefore people "get what they deserve."
• Outgroup homogeneity bias – individuals see members of their own group as being relatively more varied than members of other groups.[39]
• Projection bias – the tendency to unconsciously assume that others (or one's future selves) share one's current emotional states, thoughts and values.[40]
• Self-serving bias – the tendency to claim more responsibility for successes than failures. It may also manifest itself as a tendency for people to evaluate ambiguous information in a way beneficial to their interests (see also group-serving bias).[41]
• System justification – the tendency to defend and bolster the status quo. Existing social, economic, and political arrangements tend to be preferred, and alternatives disparaged sometimes even at the expense of individual and collective self-interest. (See also status quo bias.)
• Trait ascription bias – the tendency for people to view themselves as relatively variable in terms of personality, behavior and mood while viewing others as much more predictable.
• Ultimate attribution error – similar to the fundamental attribution error, in this error a person is likely to make an internal attribution to an entire group instead of the individuals within the group.

Memory errors

Further information: Memory bias

• Consistency bias – incorrectly remembering one's past attitudes and behavior as resembling present attitudes and behavior.
• Cryptomnesia – a form of misattribution where a memory is mistaken for imagination.
• Egocentric bias – recalling the past in a self-serving manner, e.g. remembering one's exam grades as being better than they were, or remembering a caught fish as being bigger than it was.
• False memory – confusion of imagination with memory, or the confusion of true memories with false memories.
• Hindsight bias – filtering memory of past events through present knowledge, so that those events look more predictable than they actually were; also known as the "I-knew-it-all-along effect."[28]
• Reminiscence bump – the effect that people tend to recall more personal events from adolescence and early adulthood than from other lifetime periods.
• Rosy retrospection – the tendency to rate past events more positively than they had actually rated them when the event occurred.
• Self-serving bias – perceiving oneself responsible for desirable outcomes but not responsible for undesirable ones.
• Suggestibility – a form of misattribution where ideas suggested by a questioner are mistaken for memory.
• Telescoping effect – the effect that recent events appear to have occurred more remotely and remote events appear to have occurred more recently.
• Von Restorff effect – the tendency for an item that "stands out like a sore thumb" to be more likely to be remembered than other items.

Common theoretical causes of some cognitive biases

• Bounded rationality – limits on optimization and rationality
• Attribute substitution – making a complex, difficult judgement by unconsciously substituting an easier judgement[42]
• Attribution theory, especially:
  • Salience
• Cognitive dissonance, and related:
  • Impression management
  • Self-perception theory
• Heuristics, including:
  • Availability heuristic – estimating what is more likely by what is more available in memory, which is biased toward vivid, unusual, or emotionally charged examples[29]
  • Representativeness heuristic – judging probabilities on the basis of resemblance[29]
  • Affect heuristic – basing a decision on an emotional reaction rather than a calculation of risks and benefits[43]
• Introspection illusion
• Adaptive bias
• Misinterpretations or misuse of statistics.

Notes

1. ^ Kahneman, D., & Tversky, A. (1972). Subjective probability: A judgment of representativeness. Cognitive Psychology, 3, 430–454.
2. ^ Pronin, Emily; Matthew B. Kugler (July 2007), "Valuing thoughts, ignoring behavior: The introspection illusion as a source of the bias blind spot", Journal of Experimental Social Psychology (Elsevier) 43 (4): 565–578, doi:10.1016/j.jesp.2006.05.011, ISSN 0022-1031. 
3. ^ Oswald, Margit E.; Grosjean, Stefan (2004), "Confirmation Bias", in Pohl, Rüdiger F., Cognitive Illusions: A Handbook on Fallacies and Biases in Thinking, Judgement and Memory, Hove, UK: Psychology Press, pp. 79–96, ISBN 9781841693514, OCLC 55124398 
4. ^ Plous 1993, pp. 38–41
5. ^ Why We Spend Coins Faster Than Bills by Chana Joffe-Walt. All Things Considered, 12 May 2009.
6. ^ Hsee, Christopher K.; Zhang, Jiao (2004), "Distinction bias: Misprediction and mischoice due to joint evaluation", Journal of Personality and Social Psychology 86 (5): 680–695 
7. ^ (Kahneman, Knetsch & Thaler 1991, p. 193) Richard Thaler coined the term "endowment effect."
8. ^ M. Jeng, "A selected history of expectation bias in physics", American Journal of Physics 74 578-583 (2006)
9. ^ Kahneman, Daniel; Alan B. Krueger, David Schkade, Norbert Schwarz, Arthur A. Stone (2006-06-30), "Would you be happier if you were richer? A focusing illusion", Science 312 (5782): 1908–10, doi:10.1126/science.1129688, PMID 16809528, http://www.morgenkommichspaeterrein.de/ressources/download/125krueger.pdf 
10. ^ Hardman 2009, p. 110
11. ^ Thompson, Suzanne C. (1999), "Illusions of Control: How We Overestimate Our Personal Influence", Current Directions in Psychological Science (Association for Psychological Science) 8 (6): 187–190, ISSN 0963–7214, http://www.jstor.org/stable/20182602 
12. ^ ^{a b} Sanna, Lawrence J.; Schwarz, Norbert, "Integrating Temporal Biases: The Interplay of Focal Thoughts and Accessibility Experiences", Psychological Science (American Psychological Society) 15 (7): 474–481 
13. ^ Baron 1994, pp. 258–259
14. ^ (Kahneman, Knetsch & Thaler 1991, p. 193) Daniel Kahneman, together with Amos Tversky, coined the term "loss aversion."
15. ^ Bornstein, Robert F.; Crave-Lemley, Catherine (2004), "Mere exposure effect", in Pohl, Rüdiger F., Cognitive Illusions: A Handbook on Fallacies and Biases in Thinking, Judgement and Memory, Hove, UK: Psychology Press, pp. 215–234, ISBN 9781841693514, OCLC 55124398 
16. ^ Shafir, Eldar; Diamond, Peter; Tversky, Amos (2000), "Money Illusion", Choices, values, and frames, Cambridge University Press, pp. 335–355, ISBN 9780521627498 
17. ^ Baron 1994, p. 353
18. ^ Baron 1994, p. 386
19. ^ Hardman 2009, p. 137
20. ^ Edwards, W. (1968). Conservatism in human information processing. In: B. Kleinmutz (Ed.), Formal Representation of Human Judgment. (pp. 17-52). New York: John Wiley and Sons.
21. ^ Kahneman, Knetsch & Thaler 1991, p. 193
22. ^ Baron 1994, p. 382
23. ^ Baron 1994, p. 44
24. ^ Baron 1994, p. 372
25. ^ Baron 1994, pp. 224–228
26. ^ Klauer, K. C.; J. Musch, B. Naumer (2000), "On belief bias in syllogistic reasoning", Psychological Review 107 (4): 852–884, doi:10.1037/0033-295X.107.4.852, PMID 11089409 
27. ^ Fisk, John E. (2004), "Conjunction fallacy", in Pohl, Rüdiger F., Cognitive Illusions: A Handbook on Fallacies and Biases in Thinking, Judgement and Memory, Hove, UK: Psychology Press, pp. 23–42, ISBN 9781841693514, OCLC 55124398 
28. ^ ^{a b} Pohl, Rüdiger F. (2004), "Hindsight Bias", in Pohl, Rüdiger F., Cognitive Illusions: A Handbook on Fallacies and Biases in Thinking, Judgement and Memory, Hove, UK: Psychology Press, pp. 363–378, ISBN 9781841693514, OCLC 55124398 
29. ^ ^{a b c} Tversky, Amos; Daniel Kahneman (September 27, 1974), "Judgment under Uncertainty: Heuristics and Biases", Science (American Association for the Advancement of Science) 185 (4157): 1124–1131, doi:10.1126/science.185.4157.1124, PMID 17835457 
30. ^ Hardman 2009, p. 104
31. ^ Hoffrage, Ulrich (2004), "Overconfidence", in Rüdiger Pohl, Cognitive Illusions: a handbook on fallacies and biases in thinking, judgement and memory, Psychology Press, ISBN 978-1-84169-351-4 
32. ^ Sutherland 2007, pp. 172–178
33. ^ Baron 1994, p. 283
34. ^ Marks, Gary; Miller, Norman (1987), "Ten years of research on the false-consensus effect: An empirical and theoretical review", Psychological Bulletin (American Psychological Association) 102 (1): 72–90 
35. ^ Sutherland 2007, pp. 138–139
36. ^ Baron 1994, p. 275
37. ^ Pronin, E.; Kruger, J.; Savitsky, K.; Ross, L. (2001), "You don't know me, but I know you: the illusion of asymmetric insight", Journal of Personality and Social Psychology 81 (4): 639–656, PMID 11642351 
38. ^ Hoorens, Vera (1993). "Self-enhancement and Superiority Biases in Social Comparison". European Review of Social Psychology (Psychology Press) 4 (1): 113–139. doi:10.1080/14792779343000040. 
39. ^ Plous 2006, p. 206
40. ^ Hsee, Christopher K.; Reid Hastie (2006), "Decision and experience: why don't we choose what makes us happy?", Trends in Cognitive Sciences 10 (1): 31–37, doi:10.1016/j.tics.2005.11.007, PMID 16318925. 
41. ^ Plous 2006, p. 185
42. ^ Kahneman, Daniel; Shane Frederick (2002), "Representativeness Revisited: Attribute Substitution in Intuitive Judgment", in Thomas Gilovich, Dale Griffin, Daniel Kahneman, Heuristics and Biases: The Psychology of Intuitive Judgment, Cambridge: Cambridge University Press, pp. 49–81, ISBN 9780521796798, OCLC 47364085 
43. ^ Slovic, Paul; Melissa Finucane, Ellen Peters, Donald G. MacGregor (2002), "The Affect Heuristic", in Thomas Gilovich, Dale Griffin, Daniel Kahneman, Heuristics and Biases: The Psychology of Intuitive Judgment, Cambridge University Press, pp. 397–420, ISBN 0521796792 
44. ^ Flyvbjerg, B., 2008, "Curbing Optimism Bias and Strategic Misrepresentation in Planning: Reference Class Forecasting in Practice." European Planning Studies, vol. 16, no. 1, January, pp. 3-21.
    
    
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