9 Cognitive Biases You Need to Avoid

our minds take shortcuts to help us to understand the world and make quick decisions because it takes so much effort to see things differently we're biased to keep the same view about things even when faced with new information that challenges our beliefs unfortunately these cognitive biases often cause us to get things wrong in this video we'll look at nine common mind traps and how you can avoid them one confirmation bias Frank loves coffee and thinks that drinking coffee every day will help him to live longer he ignores counter-arguments that drinking too much coffee may have health risks and continues to argue the benefits of coffee drinking to his friends this is an example of confirmation bias or the tendency to seek out and interpret information in a way that supports our pre-existing views Frank looks for every piece of information that supports his belief that coffee is good for him whilst dismissing any information that contradicts his use although coffee is not a particularly contentious subject topics and beliefs with a lot of emotion are more likely to lead to bias confirmation bias can limit our exposure to new information and perspectives affecting decision making and creativity and giving us a closed-minded view of the world to overcome this bias we need to seek out diverse views that challenge our beliefs whilst being critical of their assumptions and potential biases 2. anchoring bias when Steve Jobs unveiled the first iPad he told the audience that pundits predicted a price of 999 this price appeared for some time while he spoke when it came time to reveal the actual price of 499 everyone watching felt that the iPad was an incredible bargain of course back in 2010 no one had any idea what an iPad was worth as it was a brand new product yet everyone felt as though they just saved 500 this is an example of anchoring bias which causes us to rely too heavily on the first piece of information we're given when making decisions Steve Jobs shown an anchor price of 199 everyone would have felt like they were being ripped off anchoring by a skews our judgment and prevents us from considering other options to overcome this bias we need to remind ourselves of how initial information influences our decisions and actively seek out additional information and Alternatives before arriving at a decision [Music] three attribution bias Frank is late for an important meeting he's late because he needs to call an ambulance for someone who was hurt in a car accident as he stops to catch his breath his colleague Don thinks to himself he's so lazy and unprofessional this is an example of attribution bias or the tendency to explain another's Behavior by referring to their character or personality while attributing our own behavior to situations beyond our control like the time Don was late and blamed it on bad traffic to avoid this bias we need to wait until we know the full picture it's also helpful to put ourselves in another's shoes to understand their actions first [Music] 4. halo effect our overall impression of a person brand or product can shine like a Halo so that perceptions of one aspect carry over to other aspects one example of the halo effect is our tendency to view Attractive people as kind intelligent likable and even better leaders even though these traits are unrelated to physical attractiveness but it doesn't stop there for example people who are sociable or kind may also be seen as more likable and intelligent when perceptions of one quality bias judgments of other qualities it can impact decision making and lead to prejudices in judgments about people and situations to overcome the halo effect we need to stay open-minded objective and gather more information before making decisions [Music] 5.

availability bias instead of analyzing all the information that's available we often make decisions or form opinions based on information that's recent frequent or extreme for example after reading a news article about shark attack Frank now has an exaggerated perception of danger in the sea despite the likelihood of a shark attack being incredibly small on the other hand he's grossly underestimated the risk of sunburn and the importance of wearing sunscreen at the beach availability buyers can skew our perception of reality and lead to inaccurate decision making to overcome this bias we need to seek out multiple sources of information and avoid making decisions based solely on what comes to mind first 6. dunning-kruger effect Socrates is thought to have said the only true wisdom is in knowing you know nothing but due to a cognitive bias called the dunning-kruger effect knowing how little we know is actually very difficult to do we can illustrate this graphically by plotting confidence in our ability against our actual knowledge when we start learning something new we're often overly confident in our ability that's because we don't yet know how much there is to learn and we feel like we know everything this is sometimes perhaps a little harshly known as climbing Mount stupid the more we learn the more we realize just how complex things really are and the less confident we become plunging down into the valley of despair this is the point where many people give up but if we keep going we can become more knowledgeable and almost as confident in our ability as we were at the beginning of our Learning Journey sometimes the loudest most confident person in the room knows the least those in the middle underestimate their knowledge and the most knowledgeable are less certain and more hesitant to give their opinion because they more than most understand the true complexity of things one of the best ways to avoid overestimating our ability is simply to gain more knowledge about something the opposite of the dunning-kruger effect is imposter syndrome which you can learn more about by clicking the link above 7. ostrich effect a tendency to avoid unpleasant but potentially useful information is known as the ostrich effect after the prevalent myth that ostriches bury their head in the sand to avoid Danger unfortunately information avoidance often makes things worse than if we just tackled things head on imagine even using your credit card a lot recently you know you should check your account balance but avoid doing so because of feelings of anxiety because you don't check it you may fail to curb your spending habits and end up in more debt the ostrich effect is not the same as laziness because we go out of our way to avoid negative information although it can be tempting to bury our head in the sand it's best to stay focused on the bigger picture and use negative but helpful information to our advantage to achieve long-term goals like Financial Freedom 8.

negativity bias unlike the ostrich effect in which we guard of our way to avoid negative information negativity bias is the tendency to notice and dwell on negative events information or emotions more than their positive counterparts is thought to evolve to keep us Vigilant to threat it's the reason why we're often drawn to more depressing articles in the news something the media has known for a long time to avoid this bias it's important to learn to recognize unhelpful thoughts that are running through your mind and to replace these with more helpful ones 9.