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How Do Behavioral Biases Affect the Way We Think?

Rujuta Patil Mar 22, 2020
Denomination Effect is a preference to spend currency of smaller denomination (coins), than the currency of a larger denomination (dollar bill). Giving away five 'ten dollar' and one 'fifty dollar' bills seem to be an amount less spent than a hundred dollar bill. Explore this biases that impact our thinking.
"We usually tend to concentrate more easily on the negative side of a phenomenon. And I am not being pessimistic."
- Anonymous
Words like illogical, irrational, and unreasonable are used quite often. However, how often is the use of these words itself illogical, irrational, or unreasonable? Not very often. Because, one can be pretty much sure of his/her 'reasonableness', to frequently accuse others with unreasonableness. Common thing, right?
Since this rational or irrational business is so subjective, it is difficult to see things as white and black (Oh, shouldn't it be black and white!), at least when studying human behavior. So, all those shades of gray that shape our everyday conduct, mix up together to form many cognitive biases.
These behavioral biases force us to deviate from our ability to think rationally. Take a look at some such interesting deviations we live with, merrily.

Behavioral Biases that Affect the Way We Think

Frequency Illusion

It is when you have recently discovered a new name, word, or a thing, and it begins to appear frequently, everywhere around you. It surprises us, to the extent that some take it as a supernatural occurrence.
Suppose you learned the word 'retro' yesterday, and you saw someone carrying a bag with the word printed on it, and a restaurant named 'Retro' immediately the next day. In reality, that word was always there around you, but you happened to notice it only now.

Bandwagon Effect

Doing things or believing in something because many other people do it or believe in it, defines this bias. It is also called herd behavior.
Buying a particular consumer product primarily because several others do.

Bias Blind Spot

To think that you are less biased than others confirms that it is an example of bias blind spot. More so, when you are good at pointing out the cognitive biases of others, than your own.

"She seems to be favoring the new female trainees. I never did that in the past 15 years that I have been working here."

Decoy Effect

A concept from the marketing arena, it is the change in preference between two options after a third option is introduced. While choosing amongst Product A and B, we tend to buy Product B, when the third alternative, Product C, is brought in.
Products B and C are only similar, not that B is actually any better than A.

Choosing between a T-shirt and a (blue) shirt, if you are presented with another (green) shirt as the third alternative, you tend to buy the blue shirt. Simply because the two items (B and C) are similar (are shirts).

Confirmation Bias

It refers to believing the information that confirms the already existing beliefs or ideas. This behavioral bias affects our thinking, as it leads us to focus on and remember only that information which reinforces our preconceptions.
If one is going through three different charts showing poverty across the world, he/she is inclined towards using a reference to the chart, which confirms her preconceptions about which country is more poor.

Curse of Knowledge

It is the inability of the more knowledgeable and better-informed individual to understand the less-informed individual.

A farmer who grows food crops, and knows the physical and financial efforts it takes to grow a crop, would not understand the mentality of an urban consumer asking the produce to be sold at a cheaper price.

Distinction Bias

It is a bias that alters our way of thinking, depending on the method of evaluation. Two given alternatives appear more distinct from each other when compared simultaneously, than when they are evaluated separately.
You look for information about two different cars on the Internet, and feel that they have almost the same features. But, you see the differences between the two more clearly when you actually compare the two together, in a showroom.

Halo Effect

The Halo effect refers to our tendency of associating some good or bad traits of a person, to his/her whole personality at large.
"I often see him helping beggars on the street. He is a very kind and warmhearted person."

Mere Exposure Effect

It is a bias that says, the exposure we get to certain things (as compared to others) affects the way we build our preferences.

"I like the strawberry flavor more. That's what I've always had since I was a kid."

Normalcy Bias

Denying to plan for, or consider and react to some uncalled-for, 'never-happened-before' kind of a disaster, classifies as a normalcy bias.

Refusing to recognize or being prepared for a probable flood in the neighborhood, even after noticing bad weather conditions.

Post-purchase Rationalization

This is the most manipulative way of thinking, accrued from a peculiar bias about a purchase already done.
It is when you try to convince yourself after buying a product, that it was a good buy, using rational arguments.

"I got good value for the old gramophone; it was just lying there in my attic anyway."
This should get you thinking on how to think rationally, and not be affected by any such behavioral biases. Good Luck! Oh wait, is wishing you 'luck' a rational act?