Cognitive Biases That Affect Decision-Making

Cognitive biases are systematic patterns of deviation from norm or rationality in judgment, which often affect our ability to make sound decisions. Here are some of the most common cognitive biases that can influence your choices:

1. Anchoring Effect

People rely too heavily on the first piece of information they receive. In salary negotiations, for example, the person who makes the first offer sets a range of expectations in the other person’s mind.

2. Availability Heuristic

People overestimate the importance of information that is readily available to them. For instance, someone might claim that smoking isn’t harmful because they know a person who lived to 100 and smoked three packs a day.

3. Conformity

Conformity is the tendency of group members to abandon their own opinions in favor of the group’s. The larger the group, the stronger the effect. The likelihood that someone will make a certain decision increases if the majority of the group supports it. This is one reason why most meetings are not as productive as they could be.

4. Blind Spot Bias

The inability to recognize your own cognitive biases is itself a cognitive bias. People are more likely to notice flawed behavior and motives in others than in themselves.

5. Choice-Supportive Bias

After making a choice, people tend to feel positive about it, even if the choice has clear drawbacks. For example, you might think your dog is great—even if it often bites people.

6. Clustering Illusion

This is the tendency to see patterns in random events. It’s a key factor in gambling fallacies, such as believing that red is more likely to come up on a roulette wheel after several reds in a row.

7. Confirmation Bias

We tend to pay attention to information that confirms our existing beliefs and ignore information that contradicts them. This is one reason why it’s so difficult to have rational discussions about topics like climate change.

8. Conservatism Bias

People prefer to believe previous evidence over new information. For example, it took a long time for people to accept that the Earth is round because they didn’t want to abandon the earlier belief that it was flat.

9. Information Bias

This is the tendency to seek information even when it doesn’t affect the decision. More information isn’t always better. In fact, knowing less can sometimes lead to more accurate predictions. People may also ignore dangerous or negative information, “burying their heads in the sand.” Studies show that investors check their asset values less often during bad markets.

10. Outcome Bias

Judging a decision based on its outcome rather than on how exactly the decision was made at the time. Just because you won big in Vegas doesn’t mean gambling was a smart decision.

11. Overconfidence

Some of us are too confident in our abilities, which leads us to take risks in everyday life. Experts are often more prone to this bias than non-experts.

12. Placebo Effect

Simply believing that something will affect you can make it seem like it does. In medicine, for example, placebo pills often have the same effect as real ones.

13. Innovation Effect

When an inventor overestimates the importance and usefulness of their innovation for consumers. The inventor may also believe that it will take competitors years to copy their innovation—something that, for example, Chinese companies don’t necessarily agree with.

14. Novelty Effect

People perceive the latest information as the most accurate, ignoring older data. Investors often think that if the market is rising, it will always continue to rise.

15. Salience

The tendency to focus only on easily recognizable features or traits. For example, when thinking about death, people worry more about being eaten by a lion, even though statistically it’s far more likely to die in a car accident.

16. Selective Perception

The tendency to let your expectations influence how you perceive the world. For example, during a soccer match, players notice more fouls committed by the opposing team than by their own.

17. Stereotyping

Expecting an unknown person or group to have certain qualities. This allows us to make quick decisions, but the accuracy of those decisions is often questionable.

18. Survivorship Bias

This bias occurs when we focus only on information that has survived to reach us. For example, we might think being an entrepreneur is easy because we don’t hear about those who failed and went bankrupt.

19. Zero-Risk Bias

People prefer certainty, even if it’s counterproductive. For example, they may choose a calm, low-paying job over a high-paying but stressful managerial position.