Cognitive biases are systemic errors in thinking that negatively impact decision-making quality and outcomes.
THREAD: 20 cognitive biases to learn (so you can think clearly and make better decisions):
Fundamental Attribution Error
Humans tend to:
(1) Attribute the actions of others to their character (and not to their situation or context).
(2) Attribute our actions to situation and context (and not to our character).
We cut ourselves a break but hold others accountable.
Bandwagon Effect
Humans are a social species - this allowed us to thrive.
But it also has a downside…
It creates a strong tendency to speak, act, or believe things simply because a lot of other people do.
Bandwagon effect is similar to "groupthink" and is very dangerous.
Egocentric Bias
The human tendency is to have a higher view of one's self than is objectively warranted.
In group activities, we tend to overestimate (in comparison to objective measure) the degree and value of our own contributions relative to others.
Naïve Realism
Humans think very highly of themselves (see egocentric bias!).
We tend to believe that we see the world with perfect objectivity (cognitive biases be damned!).
We also assume that people who disagree with us must be ignorant, uninformed, or biased.
Baader-Meinhof Phenomenon
Ever notice that something you just learned seems to pop up everywhere around you?
The Baader-Meinhof Phenomenon says that increased awareness of something creates the illusion that it is appearing more often.
Like seeing 11:11 on your iPhone clock...
Pygmalion Effect
High expectations lead to high performance (and vice versa).
Those who have high expectations placed on them are more likely to internalize these expectations and improve their performance accordingly.
Leaders may attempt to use this to their advantage.
Confirmation Bias
Humans have a tendency to see and interpret information in a manner that supports previously held beliefs.
New data positive? This idea is a slam dunk!
New data negative? Must have been an error in the experiment.
Very common and very dangerous.
Backfire Effect
The "backfire effect" is the tendency for humans to use evidence in direct conflict with their thesis to further strengthen their previously held beliefs.
It is a more dangerous version of confirmation bias (also less common and scientifically contested).
Anchoring
The "anchor" is a reference point of information (usually the first piece of information received on a topic).
All subsequent thinking or decisions are silently "anchored" to this point.
Anchoring has been proven by scientists (and used car salesmen) time and again.
Dunning-Kruger Effect
People with a low ability at a task are prone to overestimate their ability at that task.
Humans are notoriously incapable of objective evaluation of their competency levels.
"He that has once done you a kindness will be more ready to do you another, than he whom you yourself have obliged."
Doing a favor makes you more likely to do another for that person than them doing a favor for you.
We reinforce our self-perceptions.
Loss Aversion
First identified by famed scientists Amos Tversky and Daniel Kahneman, it says the pain of losing something is more powerful than the pleasure of winning it.
As such, humans will typically do more to avoid losses than they will to seek gains.
Endowment Effect
Related to loss aversion, the endowment effect says that once we have something, we don't want to give it up.
Humans will demand more to give up an object than they would be willing to pay to acquire it.
Availability Bias
Humans evaluate situations based on the most readily available data, which tends to be what can be immediately recalled from memory.
This is how the news cycle impacts our thinking. Its persistent negativity cements a belief that the world is a dark place.
Survivorship Bias
History is written by the victors.
But concentrating on "survivors" and systematically ignoring "casualties" of any situation leads to distortions in our conclusions.
We overestimate the odds of success because we only read books about the successes!
People ascribe significantly more value to objects that they have created or assembled, irrespective of the final quality of the object.
We infuse our own self worth into the object, thereby increasing its value in our minds.
Hindsight Bias
Humans tend to believe that events of the past were more predictable than they actually were.
We examine the past with the benefit of hindsight but fail to recognize its impact on our thinking.
Hindsight bias can meaningfully distort our memories.
Plan Continuation Bias
Humans love plans.
Even when the plan appears to be failing (or no longer an appropriate fit for a given situation), we have a tendency to want to continue.
The dangers of a rigid "stick to the plan!" mentality are very real.
The Gambler's Fallacy
Humans are naturally bad with probabilities.
The Gambler's Fallacy says that we have a tendency to believe that past events alter future outcomes (when they clearly have no impact).
Ever thought you were "due for a win" in roulette. You're falling prey.
Curse of Knowledge
Experts (or generally, intelligent people) tend to make the flawed assumption that others have the same background and knowledge on a topic as they do.
They are unable to teach or lead in an effective manner for those still coming up the learning curve.
Cognitive biases have a profound impact on our thinking and decision-making every single day.
The first step to fighting back? Awareness. I hope this post helped with that!
Enjoy this thread? Follow me @SahilBloom for writing on mental models, business, and more.
I will be turning this thread into a longer-form piece for my newsletter, where I will explore these biases in greater depth (including examples and ways to combat them!).
And if you are a job seeker looking to leverage your improved awareness and decision-making skills to advance your career, check out my curated job board, where I share unique roles at high-growth companies in finance and tech.
The newsletter deep-dive (part 1 of 2) is now live in your inbox and ears! Please enjoy, share, and subscribe if you haven’t already. sahilbloom.substack.com/p/the-cognitiv…
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This idea changed my life (and may change yours)...
The Law of Reversed Effort:
In a Zen parable that I love, a martial arts student approaches his teacher and asks, "How long will it take me to master this craft?"
The teacher replies, "10 years."
The student, looking impatient, responds, "I want to master it faster than that. I will work harder than anyone else. I will push myself to practice for many hours every single day. How long will it take then?"
The teacher considers this new information and answers, "20 years."
My entire life changed because of a leap of faith.
There are a lot of people out there who feel stuck, but trust me, you don't have to stay that way.
If you want to take a leap, here's exactly how I'd do it:
The change you want to make in life scary because of two asymmetries:
1. Information Asymmetry: You know exactly what this path looks like, but very little about what the other path looks like.
2. Evidence Asymmetry: You have abundant evidence that you can make it on this path, but very little evidence that you can make it on the other path.
To break through the fear and take the leap:
Step 1: Gather Information
The first step is to solve the information asymmetry.
The questions you should be asking (and answering):
What does the new path look like? Visualize it in detail.
How reversible is a decision to take this new path?
Note: Most people underestimate the reversibility of a big decision. You assume that if you leave your consulting firm, you'll never be able to get another job in consulting. That is usually patently false. Most of these career decisions are reversible.
What case studies exist on successful (or unsuccessful) execution?
What perspectives can you learn from people with real, earned experience on the new path?
Are there any examples of people who have made a similar shift to what you are considering? What can you learn from them?
If you use a thoughtful process to gather information, you'll balance the information asymmetry and shorten the gap considerably.
Step 2: Create Evidence
The second step is to solve the evidence asymmetry.
While still on your current path, you need to create tangible proof that you can build a life on the other side.
What proof points can you generate of your ability to execute?
• Find one customer for your prospective new venture.
• Make $100 selling something on the internet.
• Generate a few client leads to your new coaching practice.
The tiny wins build momentum and help solve the evidence asymmetry.
Step 3: Confront the Fear
Gathering information and creating evidence should get you most of the way there.
But the fear still exists.
Here's how to address it:
1. Reframe the fear as a good thing: It means you care, it means this is something that matters.
2. Deconstruct the downside of action: What is the worst that could happen? How bad is it, really?
3. Deconstruct the upside of action: What is the best that could happen? How great is it?
4. Deconstruct the regret: How much would you regret inaction when you're 90-years-old? Could you live with that regret?
As Seneca famously wrote, "We suffer more in imagination than in reality."
These steps get the fear out of your imagination and force it into reality.
Your Player's Guide to the Leap of Faith
There's never going to be a perfect moment to make a dramatic change.
The leap of faith isn't for everyone, but if you follow this general process, you'll be well-positioned if you decide to jump.
1. Gather information 2. Create evidence 3. Confront the fear
I hope this helps a few people out there take that leap they've been too afraid to face.
A new life is on the other side...
The most important piece here:
Recognizing the fear as a byproduct of the information/evidence asymmetry.
It turns something abstract into a solvable problem.
I love this quote from Inception:
"Do you want to take a leap of faith or become an old man, filled with regret, waiting to die alone?"