Reflections on outsmarting biases

Analysis of Business Problems (ABP) has thought me and thing or two. Now, that is the joke of the century. I meant to say ABP has thought too many things, amongst which is the possibility of shutting System 1 (cognitive biases) and switching on the superior System 2 (critical thinking). That way one effectively outsmarts one’s bias. But, has that happened? I sometimes think so. I start and finish every ABP case consciously fighting System 1. But the feeling of achievement slowly wanes when Yetunde Anibaba reminds me that my submission is not a case fact. So how does one avoid biases? I will share a thing or two on how it works.

It begins with awareness. One must be alive to the fact that we can be innately biased about so many things. We have several assumptions and experiences which unknowingly shape our future actions or inactions. However, once we are aware, it becomes easier to work toward overcoming them.

Being aware of these unconscious biases starts with self-education. Examining one’s beliefs and thoughts helps with understanding the assumptions one holds. Another wat is to question the premises of one’s thinking. That is, constantly question and challenge one’s thinking, to improve one’s thinking. A rigorous process but a rewarding one in the long run.

Daniel Kahneman’s 2011 book, Thinking Fast and Slow is a recommended text that guides self-education. The book is based on two main modes of thought- System 1 and System 2 thinking. Both modes are distinct and drive most of the actions we take as humans. System 1 is quick, automatic, and emotional. It usually happens with little or no effort. While System 2 is more deliberate. It allows for attention to detail, can be complex, and is more logical. In System 1 mode, one unconsciously redefines questions. This concept is known as cognitive miserliness, in which the tendency to take the easier route out of a hard question is high.

Overcoming psychological traps is another way to outsmart one’s biases. There are many types of traps namely anchoring, sunk cost, conformation, and framing.

Anchoring trap

This is the tendency to heavily rely on the initial piece of information provided. One can be said to be anchored by this information. This type of trap influences decisions and choices as it is dependent on established prior information.

Framing Trap

The concept of the cup being half full or half empty most aptly describes the framing trap. Another example is 90% fat-free and contains 10% fat. Depending on the way it is presented, it can frame and influence decision-making as well.

Sunk Cost Trap

This is the tendency to irrationally escalate one’s commitment to a course because of a perceived investment of time or money. Even when it no longer meets their expectations, they stick to it. For instance, going ahead with an abusive relationship because you have been in it for 5 years.

Confirmation Trap

This is a psychological trap that encourages one to search for information in a manner that satisfies previous assumptions. There is a deliberate attempt to ignore any data that contradicts our thinking.

Conclusion

Whichever the bias or psychological trap, recognizing they exist is the first step towards outsmarting them.  A conscious effort is the best tool for seeking case facts in an ABP class.

#EMBA 27