Walking Wounded

Thursday, March 5, 2009

Decision-making and behavioral biases

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

  • Bandwagon effect — the tendency to do (or believe) things because many other people do (or believe) the same. Related to groupthink and herd behaviour.
  • Base rate fallacy — ignoring available statistical data in favor of particulars.
  • Bias blind spot — the tendency not to compensate for one's own cognitive biases.
  • 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.
  • Congruence bias — the tendency to test hypotheses exclusively through direct testing, in contrast to tests of possible alternative hypotheses.
  • Conservatism bias — the tendency to ignore the consequence of new evidence. (Related to base rate fallacy.)[1]
  • Contrast effect — the enhancement or diminishing of a weight or other measurement when compared with a recently observed contrasting object.
  • Déformation professionnelle — the tendency to look at things according to the conventions of one's own profession, forgetting any broader point of view.
  • Distinction bias — the tendency to view two options as more dissimilar when evaluating them simultaneously than when evaluating them separately.[2]
  • 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".[3]
  • Experimenter's or Expectation bias — the tendency for experimenters to believe, certify, and publish data that agrees with their expectations for the outcome of an experiment, and to disbelieve, discard, or downgrade the corresponding weightings for data that appears to conflict with those expectations.[4]
  • Extreme aversion — the tendency to avoid extremes, being more likely to choose an option if it is the intermediate choice.
  • Focusing effect — prediction bias occurring when people place too much importance on one aspect of an event; causes error in accurately predicting the utility of a future outcome.
  • Framing — by using a too narrow approach or description of the situation or issue. Also framing effect — drawing different conclusions based on how data are 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.
  • Illusion of control — the tendency for human beings to believe they can control or at least influence outcomes that they clearly cannot.
  • Impact bias — the tendency for people to overestimate the length or the intensity of the impact of future feeling states.
  • Information bias — the tendency to seek information even when it cannot affect action.
  • Irrational escalation — the tendency to make irrational decisions based upon rational decisions in the past or to justify actions already taken.
  • Loss aversion — "the disutility of giving up an object is greater than the utility associated with acquiring it".[5] (see also sunk cost effects and Endowment effect).
  • Mere exposure effect — the tendency for people to express undue liking for things merely because they are familiar with them.
  • Moral credential effect — the tendency of a track record of non-prejudice to increase subsequent prejudice.
  • Need for closure — the need to reach a verdict in important matters; to have an answer and to escape the feeling of doubt and uncertainty. The personal context (time or social pressure) might increase this bias.[6]
  • Neglect of probability — the tendency to completely disregard probability when making a decision under uncertainty.
  • Not Invented Here — the tendency to ignore that a product or solution already exists, because its source is seen as an "enemy" or as "inferior".
  • Omission bias — the tendency to judge harmful actions as worse, or less moral, than equally harmful omissions (inactions).
  • 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.
  • 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.
  • 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.
  • Selective perception — the tendency for expectations to affect perception.
  • Status quo bias — the tendency for people to like things to stay relatively the same (see also loss aversion, endowment effect, and system justification).[7]
  • 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.
  • 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.
  • Zero-risk bias — preference for reducing a small risk to zero over a greater reduction in a larger risk.

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