Cognitive bias is defined as the tendency of the human brain to perceive information through a filter of personal experiences and preferences. It is a coping mechanism used by the brain to prioritize and process the vast amount of information it receives. Although it is an effective mechanism, it can cause errors to still persist in the long run. Here are the 10 common cognitive biases that can lead to bad decision making:
1. Confirmation bias
Confirmation bias is based on the finding that most people tend to listen more carefully to information that confirms their pre-existing beliefs and prejudice.
2. The Hindsight Bias
Hindsight bias is a common cognitive bias that involves the tendency of people to see events, even random ones, as more predictable than they are. The tendency to look back at events and believe that we “knew it all along” is an example of Hindsight bias
3. The Anchoring Bias
It is the tendency to be overly influenced by the first piece of information that we hear. For example, the first number voiced during a price negotiation typically becomes the anchoring point from which all further negotiations are based.
4. The actor observer bias
The Actor-observer bias is best explained as a tendency to attribute other people’s behaviour to internal causes while attributing our own actions to external causes.
5. The Halo Effect
Halo effect is the ability of a person, company, brand or product in one area to positively influence one’s opinion or feelings in other areas.
For example, have you found that you’re more drawn to a product or service because your favourite celebrity “endorses” it? Your positive feelings about that celebrity can make you perceive everything that celebrity associates with as positive, too.
6. The self-serving bias
It is the tendency to give oneself credit for successes but lay the blame for failures on outside causes.
7. The Availability Heuristic
This tendency to estimate the probability of something happening based on how many examples readily come to mind is known as the availability heuristic. For example, Smokers who have never known someone to die of a smoking-related illness might underestimate the health risks of smoking.
8. The Optimism Bias
We tend to be too optimistic towards one’s own self. We overestimate the likelihood that only good things will happen to us while grossly underestimating the probability that negative events can impact our lives.
9. Negative Bias
This refers to the tendency to give more attention and weight to negative news than to the positive ones.
10. Overconfidence effect
It is the tendency to overestimate one’s abilities with respect to the actual performance or to the others’ performance.