Critical Thinking Part 1 – Watch Those Biases

They don’t call it Critical Thinking for nothing. Making judgments and decisions that are rational, logical, and well thought out is a key element that every leader needs to have the skills to do. It embraces a spirit of inquiry that asks how conclusions are arrived at, where the evidence is, how emotion is involved, and whether alternatives exist and have been considered. This post and part 2 which will follow will take a critical look at critical thinking.

As a starting place, let’s talk about cognitive biases. These are not biases based on culture, or religion, or upbringing, but are specific limitations in our thought processes that can lead us to reach false conclusions or make bad (or at least questionable) decision. They are the things that fool us into thinking that we have reached a correct conclusion, even when the facts might argue otherwise. Understanding cognitive biases that people are prone to is the first step (although no guarantee) toward eliminating them as a source of trouble.

There may not yet be a completely exhaustive list of all of the possible cognitive biases – at least one source lists nearly 60 that might show up in a business context, and there are probably more that occur in a scientific research setting. For this instance, we are going to focus on ten cognitive biases that are likely to be the most destructive to you in your role as a leader, or as part of a highly functioning team. By the way, lest you draw any erroneous conclusions, the following are listed alphabetically, which might not have anything to do with how frequently they occur, nor how damaging they might be.

Affect Heuristic: This is a very human response in which our emotional state affects our decision making. We assess risk or opportunity based on our affect, or our gut feeling. It could explain, for example, why someone who waited tables while they went to law school might routinely leave bigger tips when dining out –regardless of the quality of service – than someone who clerked in an office during their school years.

Ambiguity Effect: When I feel that I have a good chance of predicting the outcome of some behavior or decision, I might favor it over a choice in which I have less confidence in my prediction ability. I might choose to open a branch office in a town where I am already doing business, feeling that I know my target market, rather than starting an endeavor in a neighboring state, where I feel less confident.

Anchoring Effect: Our minds can be biased by the first impressions we are presented with. This often comes into play in negotiations for purchases or salary increases. If an employee earning $55,000 a year comes to you and asks for a $3,000 raise, you might be inclined to offer them $2,000 as a counter proposal. If that same employee asks for a raise to $65,000, you might be satisfied if you can talk them into accepting $60,000. In both cases you “negotiate” the raise to a lower amount than proposed, but as you can see in the second case, feeling like you had done an effective job of talking them into a reasonable compromise might be faulty thinking.

Bandwagon Effect: This is a form of “groupthink” that occurs when increasingly larger numbers of people accept or adopt a position, leading to even more people “jumping on the bandwagon”. The information that lots of people repeat becomes the fact of the matter, even if there is evidence to the contrary.

Confirmation Bias: This is the tendency for people to put more emphasis on information which confirms preconceptions whether or not the information is true. It shows up in areas like the climate change argument, and most political discussions, but also rears its head in the workplace, such as when a pleasant or “good-looking” employee is perceived as being more effective on the job than someone who is not as much fun to be around, despite actual job performance data to the contrary.

Fundamental Attribution: This describes the tendency for people to put a greater emphasis on internal or personality characteristics or abilities as an explanation for another person’s behavior, and not to consider external factors. I may assume that you didn’t get work done that I expected from you because you are lazy and ignore the fact that the tools I have given you are old or rusty.

Gambler’s Fallacy: This occurs when we believe that something that is actually random can be more predictable. If I flip a coin 10 times and it comes up heads nine of those times, the next coin flip still has a 50:50 chance of being heads, even if my gut tells me it is more likely to be tails, since tails has been underrepresented in the previous tries.

Observational Selection: Sometimes also known as the “streetlight effect”, possibly relating to the old joke where a policeman encounters a man on his knees on the sidewalk, and when asked to man says he has lost his car keys. After helping the man look for the keys for a few minutes without success, the police officer asks the man if he is sure he dropped them there. The man says no, he lost them in the park, but “the light is better here”. When we look for information only in places we think we will find it or where it is easiest to obtain, we suffer this cognitive bias.

Post-Purchase Rationalization: This is related to the concept of Stockholm Syndrome, where prisoners begin to view their captors with positive feelings, sympathy or empathy. When I have spent money, especially a good deal of money on a product or system that is supposed to help my business thrive, I am more likely to overlook the fact that it doesn’t really do things the way I wanted, because I have sunk a lot of money into it, because it would cost a lot to replace it, and/or because to think otherwise would be to suggest I made a bad decision at the outset.

Status-Quo Bias: This is what happens when we are more comfortable with decisions that don’t rock the boat. Maintaining our current course seems safer than trying something new. It can arise in business in myriad ways, from keeping a group insurance plan with our long-time carrier even when rates keep rising, to delaying changeover to new manufacturing processes even as we see our competitors embracing progress.

In our next installment, we will talk more about Critical Thinking as a practice, but the biases above, and many others that exist, are things you should look for in your process, and eliminate whenever possible.