11 Decision-Making Biases That Secretly Cloud Your Judgment

Business decisions fill our days at work — some small and insignificant — others bigger with more moving parts and more financial consequences.  It’s easy to get swept along with a decision that your team has fallen in love with. It’s easy (and often faster) to rely on your own prior knowledge to guide decisions. “The last time this happened ….”

These things are instinctive. We begin to feel uncomfortable and uncertain when we get outside our comfort zone. Staying objective takes effort, but it’s key to making good decisions.

The types of bias that can affect decision making are vast. Here are just a few to get you started thinking about how difficult staying objective can be:

1. Status quo bias: The tendency to like things to stay relatively the same.

2. Authority bias: Favoring the opinions and ideas of authority figures within a team.

3. Social comparison bias: The tendency, when making hiring decisions, to favor potential candidates who don’t compete with one’s own particular strengths.

4. Loss-aversion bias: The tendency to prefer avoiding losses to acquiring equivalent gains.  We stick to a decision because starting something new causes us to fear losing what we gained.

5. Pro-innovation bias: The tendency to think that all innovation is good for everyone simply because it is novel, regardless of potential negative impacts.

6. Present bias: Paying attention to what is happening now, without concern for the future.

7. Anchoring bias: The tendency to pay more attention to information we already have or that is show first.

8. Normalcy bias: The refusal to plan for, or react to, a disaster that has never happened before.

9. Distinction bias: The tendency to view two options as more dissimilar when evaluating them simultaneously than when evaluating them separately.

10. Confirmation bias: The tendency to search for, interpret, focus on and remember information in a way that confirms our preconceptions (rather than looking for solutions that challenge them).

11. Blind spot bias: Recognizing biases in judgment of others, while failing to see the impact of biases on one’s own judgment.

And if you think being bright or in a position of power gives you an edge … think again. It’s not genius that makes for good decision making. It’s disciplined, logical processes.  In fact, according to Daniel Kahneman, Nobel Prize- winning economist and author, intelligence does not reduce our susceptibility to bias — in fact, over-confidence can actually increase bias.

Further complicating our need to keep bias out of our decision making is our difficulty in judging our own biases (the blind spot bias noted above).

 

Learn more when you register for our 1-hour webinar: Defeat Decision Fatigue and Stop Overthinking.

 

Two Thinking Systems

In addition to all these biases, Kahneman and his late colleague Amos Tversky “realized that we actually have two systems of thinking. There’s the deliberate, logical part of your mind that is capable of analyzing a problem and coming up with a rational answer,” reports a bbc.com article. This type of thinking is slow and deliberate. 

But most of the time we’re actually using our faster, more intuitive system of thinking.  It’s this fast, instinctive mind that is in control — handling everything from switching lanes while we’re driving to work, to making a choice on ice cream flavors for our double-dip cone at Baskin-Robbins.

Complex, multifaceted, long-ranging decisions should be passed over to our slower, more logical, deliberate self. Taking the time for this thought process is necessary for good decision making. If you need a review of the decision-making process itself, check out this quick step-by-step article from University of Massachusetts.

In addition to taking time for this thought process, an article by Steven Ringel, TheConsultantLounge.com, offers help.

Two ways to help make better business decisions.

1. Use groups or teams. Many decisions need to be made quickly and don’t allow time to assemble a group. But, when possible, a group will be able to come up with more possible alternatives and provide pertinent facts and expertise. These groups need to be diverse. Consider including someone who’s been in a similar situation or people with niche knowledge to increase accuracy. Also, team members need to know how they will be involved in the decision — who will ultimately decide.
2. Rely on data. How can this be done effectively? Consider the factors that are involved in your decision. Assign relative importance to each item. Reliance on the numbers can keep you focused on the facts and help you stick to the pros and cons.

Everyone has biases, and being aware of them doesn’t change them. When it comes to decision making, it’s important to acknowledge the role they play, to include multiple perspectives and look to the data for direction. Whether you’re choosing a new hire or charting a new course, approach decisions as objectively as possible.