{"id":3760,"date":"2021-07-15T12:32:50","date_gmt":"2021-07-15T10:32:50","guid":{"rendered":"https:\/\/www.myskillsacademy.de\/?page_id=3760"},"modified":"2021-07-20T12:33:02","modified_gmt":"2021-07-20T10:33:02","slug":"cognitive-biases","status":"publish","type":"page","link":"https:\/\/www.myskillsacademy.de\/de\/cognitive-biases\/","title":{"rendered":"Cognitive Biases"},"content":{"rendered":"\t\t
MySkills Academy will review following\u00a0<\/span>cognitive <\/strong>biases<\/strong>: affinity bias<\/a><\/span>, confirmation bias<\/a>, Dunning Kruger effect<\/a>, loss aversion bias<\/a>, curse of knowledge<\/a>, conformity bias<\/a>, planning fallacy<\/a>, framing bias<\/a>, conservatism bias<\/a>, authority bias<\/a>, ostrich effect<\/a> and the denomination effect<\/a>. Moreover, we will give some examples and introduce tips on how to avoid them. <\/strong><\/span>What is <\/span>bias<\/span>? Simply talking, it\u2019s something which impacts our rational and objective behaviour and decision making process. Let\u2019s review some popular <\/span>cognitive <\/span>biases<\/span>, so get a cup of tea and enjoy \ud83d\ude42<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t Affinity bias<\/strong> is a typical example of <\/span>cognitive <\/span>biases<\/span> for people all over the world – we like people who are similar to us. Human beings are social creatures, but it\u2019s much easier to communicate with somebody who looks or behaves like you. For example, a person having the same nationality as you, also wearing glasses and a beard or simply having the same hobby as you. You are most likely to trust this person and accept his\/her arguments without any justification.<\/span><\/p> The most important thing is to prevent the negative impact of <\/span>affinity <\/span>bias<\/span> in companies, especially during interviews. The easiest way is to take some time to analyse the provided information or ask other colleagues to express their opinions or even participate in discussions. Therefore, the decision will be less biased and more objective, making the <\/span>affinity <\/span>bias<\/span> less significant.\u00a0<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t Professionals are often affected by the\u00a0Confirmation\u00a0bias<\/strong>, which means that they tend to make their strategies, decisions or work-related processes based on their own assumptions, but not on research data or facts. Moreover, they are finding all kinds of ways to justify their ideas by doing \u201cpost-facto research\u201d (after the strategy was implemented). In this way, you are least likely to find a solution but will be able to protect your own opinion, which though might not be the perfect choice and could fail in practice.\u00a0Confirmation\u00a0bias\u00a0is also very common for students working on different projects and trying to save some time learning the theory.<\/p> Compared to other\u00a0cognitive\u00a0biases,\u00a0confirmation\u00a0bias\u00a0is easy to prevent – you need to always begin with research and build your ideas based on the analyzed data, even if you think that you don\u2019t need it.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t The <\/span>Dunning Kruger Effect<\/strong> is a <\/span>cognitive <\/span>bias<\/span> that creates an overestimation of people\u2019s own skills and knowledge, especially in the areas where they have little or even no experience at all. Simply talking, humans can be very proud, assuming to be a professional in all fields. A common example of the <\/span>Dunning Kruger Effect<\/span> from the business world is the superior thinking that he\/she knows more than their subordinates in a very specific or technical subject, despite not having the advanced skills required.<\/span><\/p> Cognitive <\/span>biases<\/span> like the <\/span>Dunning Kruger Effect<\/span> is very difficult to avoid, because of human nature. We would advise you to use rational thinking in order to evaluate your knowledge fairly. However, it does not always help, thus try to listen and accept arguments and comments of other people.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t Loss Aversion<\/strong> is a typical representative of business <\/span>cognitive <\/span>biases<\/span> but could also be present in daily life. This <\/span>bias<\/span> creates a fear of losing an investment, which ultimately overcomes the desire to reach higher profit. <\/span>Loss aversion<\/span> bias<\/span> blurs your ability to make an objective decision, from which you might profit more in the long run. If we take business investors as an example, many of them would prefer not to lose 5000 Euro, rather than earn 10 000 Euro. An example of <\/span>Loss aversion <\/span>bias<\/span> from daily life is buying stocks or bonds, which could bring much more money than keeping savings in banks.<\/span><\/p>\n How to avoid this <\/span>bias<\/span>? The solution is more simple than you might have thought: The more often you lose money – the lower your fear of losing an investment will get. Still, avoiding other <\/span>cognitive <\/span>biases<\/span> is not that \u201ceasy\u201d \ud83d\ude42<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t The Curse of Knowledge<\/strong> – is a typical <\/span>cognitive <\/span>bias<\/span> not only within the business world but also daily life. Human beings are constantly developing and usually have never finished learning something new. People affected by this <\/span>bias<\/span> tend to forget that they did not have all the current knowledge before, ultimately assuming that everyone else also has the same knowledge. The more things become more obvious and clear for that person, the more he or she assumes it is also for others.<\/span><\/p> It is very important to minimize the effect of this <\/span>cognitive <\/span>bias<\/span>, especially in business life. However, in most of the cases it is only possible to achieve with the help of direct feedback and open conversation. Very often employees are afraid to ask for clarification of some tasks or to confess that they don\u2019t know something, leaving their superior in a different belief. That is why, Curse of Knowledge is one of the <\/span>cognitive <\/span>biases<\/span> most difficult to avoid in the business area.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t Conformity Bias<\/strong> – without any doubts your decision making has been negatively impacted by this <\/span>cognitive <\/span>bias<\/span> before. <\/span>Conformity<\/span> bias<\/span> is an effect of herd thinking, which forces us to follow the opinion of the majority even if we, deep down, disagree. <\/span>Cognitive <\/span>biases<\/span> like this one are very dangerous in all fields of our life, as they push us away from our own decisions, thus creating regrets that could follow us for many years. Moreover, you can observe the effect of <\/span>Conformity<\/span> bias<\/span> within a company\u2019s process, as it kills creativity and ultimately the uniqueness of most business models, advertisements, technical features etc.<\/span><\/p> As a result, a majority of today\u2019s products and services have lost their true USPs (Unique Selling Proposition) and are perceived as very similar to each other. In this case, the development of independent, creative thinking is crucial for the future of businesses. As an example, companies from Eastern countries, proactively motivated their employees to share their own ideas for additional rewards. How do you like this approach to defeat <\/span>cognitive <\/span>biases<\/span>? \ud83d\ude42<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t Planning fallacy<\/strong> is a <\/span>cognitive <\/span>bias<\/span> which affects our adequate decision making process and creates an additional source for stress, forcing us to set up unrealistic expectations over the progress of our planned targets. Normally, people tend to overestimate their own availability, only considering positive outcome scenarios for all their scheduled activities. This <\/span>bias<\/span> causes a set-up of non-realistic deadlines, thus leading to overworking in most of the cases.<\/span><\/p> The solution is very simple: The implementation of more flexible deadlines and the mental freedom to say \u201cNo\u201d to some requests, if you anticipate that something could go wrong.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t One of the very famous <\/span>cognitive <\/span>biases<\/span> is <\/span>Framing bias<\/strong>, which affects the perception of the same information, if it was presented in different ways. For example, investors are most likely to accept the proposal if you tell them that it has a 75% chance to succeed. While vice versa, they will be less interested in the offer, if presented with a 25% chance to fail. Basically, the conditions of the offer do not differ, but the psychological impact of \u201csuccess vs failure perception\u201d creates a significant difference in the final decision making process.<\/span><\/p>
\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\tAffinity Bias and Confirmation Bias<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\tDunning Kruger Effect and Loss Aversion<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\tCurse of Knowledge and Conformity Bias<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\tPlanning Fallacy and Framing Bias<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t