There are said to be two kinds of people – those who view the glass as half-empty, and those who view the glass as half-full. We either look at what’s missing or focus on what’s working. It all depends on how we perceive things; and, that is driven by our unconscious biased thinking patterns.
In an earlier post, we explored some key biases that drive our decision-making, sometimes without our knowing it. We will examine a few more in this one. But, why are we doing this? Research shows that when people are made aware of their cognitive thinking patterns and they commit to changing those biases, 91% of them implement at least one new unbiased behavior.
Ready to dive in again? Here we go:
- #4 Halo effect: This bias is driven by first impressions. If you’ve had a positive experience when you met someone, and liked them, then you are more likely to trust their opinions and be influenced by their suggestions. And if you don’t connect with someone, it doesn’t get better.
For example, if your new neighbor is a charming, successful person, and recommends investing in art, you might do it. Even without questioning his competence or qualifications to advise you. But if a colleague you don’t get along with recommends the same, you are likely to dismiss the idea even without considering it.
- #5 Present bias: If we asked you whether you would like to have 50,000 INR today, or 65,000 INR a month from now, what would you choose? Like most people, you might choose the first option, despite knowing that in just a month, you would get more money.
Why does this happen? It is called the present bias, in which we have a tendency, when considering a trade-off between two future moments, to rely more heavily on the one closer to the present. We place more value on what we can achieve today. Perhaps, that’s why some of us struggle with saving for the future. We go for instant gratification.
- # 6 Self-serving bias: Here, we blame external forces when bad things happen and give ourselves credit when good things happen. For example, athletes win a game and attribute their win to hard work and practice. When they lose, they blame it on bad referees, or just poor luck.
If you bought stocks and lost money, you might blame the market, or the friend who asked you to buy them. But if you made profits, you most likely will say that you made a good choice.
Note, that shining light on our biases is not an attempt to bring about shame or a sense of incompetence. Instead, it is an opportunity to correct our thinking patterns, so we can make better decisions. As Daniel Kahneman says, our biases are only optical illusions.