How To Be SMARTER: Fallacies & Biases
Derick and Allen explain how to be smarter with decisions by not falling victim to cognitive biases.
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1. Survivorship Bias
2. Gambling Fallacy
3. Availability Bias
4. Social Loafing
5. Commitment Consistency
6. The Inevitability of Highly Unlikely Events
The first fallacy we go over is the survivorship bias which is is the logical error of concentrating on the people or things that made it past some selection process and overlooking those that did not, typically because of their lack of visibility. This can lead to false conclusions in several different ways.
People have a tendency to focus on only the people who have succeeded in any industry whether in being an entrepreneur, musician, author or youtube celebrity. This tendency makes overestimate our chances success because we don't realize how many failures or "graveyards" all of these industries have. To combat this, a hyper vigilance toward hard work can help you from giving up as you fail many times before finally breaking through.
The next cognitive bias is gambling fallacy which, also known as the Monte Carlo Fallacy individual erroneously believes that a certain random event is less likely or more likely, given a previous event or a series of events. This line of thinking is incorrect, since past events do not change the probability that certain events will occur in the future.
The next bias is availability bias. The availability bias is the human tendency to think that examples of things that come readily to mind are more representative than is actually the case. The psychological phenomenon is just one of a number of cognitive biases that hamper critical thinking and, as a result, the validity of our decision. For example, if you are a financial analyst you will tend to find world solutions under this lens. If you are a teacher you will tend to think people need to learn more to change the world, etc.
Whatever it is that you find yourself thinking of often, you will tend to use these for examples in problem solving. However, just because it is readily available in our minds does not mean it is more likely to be true, and even if it is true, it is just luck and not replicable.
In social psychology, social loafing is the phenomenon of a person exerting less effort to achieve a goal when he or she works in a group than when working alone and is seen as one of the main reasons groups are sometimes less productive than the combined performance of their members working as individuals.
In Rolf Dobelli's book The Art of Thinking Clearly he explains that when results are not directly visible people will fall victim to this bias. When individual performance is directly visible then people will tend to put in more effort. This is very important when understanding how to run a business , or to be an effective leader. This also ties into the diffusion of responsibility and it is important to remember to assign task to individuals rather that the group so that there are direct consequences and rewards if the task is or is not completed.
Commitment consistency is People’s strong desire to be—and to appear—consistent with what they have already done. Once people have made a commitment or taken a stand, they feel pressure to behave consistently with that commitment.
While not all consistency is bad as Ralf Waldo Emerson put it a "foolish consistency is the hobgoblin of small minds". It is important to ensure that with each decision you are making you should try to forget what opinions you had on it in the past and think about the situation as if it is your first time seeing it.
The last bias we look over is the inevitability of highly unlikely events. This one does not has much application to our lives other than a fun way at looking at coincidences. To put it simply: anything that can happen, will happen given enough time.
The example I used is from The Art of Thinking Clearly by Rolf Dobelli. At 7:15 pm on March 1, 1950 a church blew up in Beatrice, Nebraska. All 15 people who were supposed to be there for Choir were not there on time so no one was hurt. The Hand of God, or coincidence?
The Inevitability of Highly Unlikely events says that because hundreds of thousands of people meet for Church choir every century, and the churches do not explode, this event will be the 99%, and then every once and a while this Highly Unlikely Event will occur. This explains many things like how can humans could exist. Because of how physics and chemistry are ordered, even though highly unlikely this could explain how humans exist. Even though were are the perfect distance from the sun and all the other millions of coincidences that have brought to life the existence of humans, this is one explanation for how this can be possible.
Books:
Influence by Robert Cialdini
Art of Thinking Clearly by Rolf Dobelli
Fooled by Randomness by Nicholas Nassim Tauleb
Predictably Irrational by Dan Ariely