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Transcript of Cognitive biases
- A SHORT VIDEO TO GET US STARTED HTTP://WWW.YOUTUBE.COM/WATCH?V=BSE_SAVX_2A
- WHEN WAS THE LAST TIME YOU HAD TO MAKE A DECISION?
- We start making decisions from the moment we wake up. These decisions vary in complexity. Some are relatively simple, some are automatic, while others demand a higher degree of reflection and thinking. Some of those decisions have serious implications and consequences Good/bad/ugly
- AS MUCH AS YOU PLAN FOR A DESIRED OUTCOME The outcome will depend on the decisions you make and every subsequent decision that follows.
- WE ARE CONSTANTLY EVALUATED ON OUR JUDGEMENT & DECISION MAKING ABILITIES
- BY OUR EMPLOYER & COLLEAGUES
- FAMILY, WIFE OR HUSBAND
- COGNITIVE BIAS Is a mental error caused by our simplified information processing.
- HEURISTICS Psychological tendencies that cause the human brain to draw incorrect conclusions. Mental shortcuts, rules of thumb, or gut-feeling that assist us to make quick decisions without formal analysis. Driving Attacked by a bear/animal About to get hit by a car
- We are not even aware we are committing them WHY ARE THEY CRUCIAL & CAN BE DANGEROUS?
- THE FUNCTION YOU OCCUPY OR THE ROLE YOU PLAY DETERMINES THE IMPACT OF YOUR DECISION
- Just like our physiological system. You need every organ to function properly and optimally. From Janitor to CEO We cannot disregard anyone. EVERY FUNCTION/ROLE MATTERS
- EVERY ONE OF US IS PART OF AN ORGANIZATION IN ONE WAY OR ANOTHER Home/Family Community Work Sport
- CIRCLE OF INFLUENCE DONT UNDERESTIMATE INFLUENCE
- COMPLEXITY THEORY & SYSTEM THINKING
- Habits & Personality Automatic Associations Social & Environmental influences Relative comparisons Oversimplifica tions Mindset defense
- Confirmation Anchoring Framing
- Sunk Costs Overconfidence Recency Effect MOUNT EVEREST 1996 DISASTER
- MENTAL MODELS & THE CONFIRMATION BIAS
- VISUAL SYSTEM & ASSOCIATIVE MEMORY
- VISUAL ILLUSIONS
- NEARBY COMPARISON AND CHOICE First group could have either $10 or a nice pen Second group could have $10, a nice pen, or an uglier pen
- LETS EXPERIMENT A bat and a ball cost $1.10. The bat is $1 more than the ball. How much is the ball?
- READ THE COLOR
- John is a quiet man, with a retiring personality. Is he more likely to be: A librarian A Salesman
- HERE IS ONE THAT SHOULD HELP YOU IN NEGOTIATION Is the height of the tallest redwood more or less than 1200 feet? What is your best guess about the height of the tallest redwood?
- A study of a Campbells soup sales promotion was conducted when the product was on sale for about 10% less than regular price. On some days a sign on the shelf said Limit of 12 per person and on other days the sign said, No limit per person. Shoppers purchased an average of 7 cans of soup when the limit was in effect, double the amount that they purchased with no limit.
- WHAT IS THIS PARAGRAPH TALKING ABOUT?
- THINKING FAST AND SLOW TWO SYSTEMS System 1 Intuitive System 2 Reflective
- CRITICAL THINKING Reasoning Argument Claims Premises Fallacies Assumptions Conclusion
- BECOME A CRITICAL THINKER It is a skill you can practice in order to master. Once you master it, watch how you perceive others. Dont make it affect you negatively by thinking less of others.
- RECOGNIZE QUALITY DECISIONS A Decision framed within a context Creative and well-thought of alternatives Relevant & reliable information which to base the decision upon, while incorporating inherent uncertainty Logical Reasoning & analysis that help draw meaningful conclusions
- DECISION QUALITY QUESTIONS Is there any reason to suspect motivated errors, or errors driven by the self-interest of the recommending team? Have the people making the recommendation fallen in love with it? Were there dissenting opinions within the recommending team? Could the diagnosis of the situation be overly influenced by salient analogies? Have credible alternatives been considered? If you had to make this decision again in a year, what information would you want, and can you get more of it now? Do you know where the numbers came from? Can you see a halo effect? Are the people making the recommendation overly attached to past decisions? Is the base case overly optimistic? Is the worst case bad enough? Is the recommending team overly cautious?
- We are great at recognizing our physical limitations and we tend to do something about it. Are willing to do the same with our Cognitive limitations?
- Thank you CREDIT GOES TO DR DAN ARIELY & STANDFORD UNIVERSITY STRATEGIC DECISIONS GROUP