How To Recognize And Overcome 13 Types Of Bias
Take charge of your thinking and decision making.
Bias is when you’re inclined to choose one thing over another, consciously or not.
It comes from 2 situations:
When you make decisions with missing or unknown information,
When you tell yourself the wrong story based on the information you have.
There are lots types of bias, but I’m going to highlight the ones that impact decision making the most.
Let’s dig in.
1 Bandwagon effect
Let’s say you’re an entrepreneur.
You hear everyone talking about the potential of AI on Linkedin and X. So you jump on the bandwagon and build an ‘AI’ company, without really questioning whether you are addressing a real problem, and whether you need AI to really solve it.
People are sheep. They’re sheeple.
They tend to think and act in the same way as the herd. It’s easy to do, because instead of thinking for yourself, you can outsource it to the masses - surely everyone can’t be wrong? Right?!
Wrong.
The bandwagon effect was partly responsible for:
People hoarding toilet paper as the pandemic hit,
The bitcoin hype of 2021 and crash of 2022,
Everyone talking about GenAI and ChatGPT,
Most economic crises (e.g. the dot-com crash and housing market bubble).
How to overcome it:
Think for yourself and figure out what’s true.
Outside opinion is an important signal, but have the guts to take your own stand, for your own reasons.
2 Availability bias
You’re managing a project.
You’re trying to figure out how many people you’ll need to work on it. The first thing that comes to mind is that a recent similar project took 3 people to complete, so you decide to staff the new project with 3 people too.
But if you looked at all the data, you’d see that most other similar projects needed 8 people. What first came to your mind was not the complete picture.
This is availability bias at work. It’s a mental shortcut you use by focusing on the information that comes to mind easiest. You assume you have all the information, when you actually don’t.
How to overcome it:
Availability bias is not always a problem: you need to rely on memorable moments to make better decisions, because that’s how you learn. But to become a better learner, you need to do a few simple things to stop this bias from limiting you:
Pause before making a decision. This gives time and space for other memories and experiences to surface, rather than just relying on the most recent ones (see: recency effect).
Remember that the information you have is almost always incomplete. Ask yourself what information isn’t available that could change your decision.
3 Confirmation bias
You have a theory that young people make terrible CEOs.
So when you see a young CEO making a small mistake, you automatically use that piece of information to confirm your theory.
You ignore the possibility that something else could have caused the mistake.
This bias is your tendency to frame the information in front of you to confirm a theory you already have - even if the new information actually goes against your current beliefs.
You twist the story to fit your existing belief, rather than challenge it to get closer to the truth.
How to overcome it:
Focus on the facts in the information, so that you can see it for what it is.
When analyzing new information, ask yourself: how could this be interpreted differently? If it helps, put yourself in someone else’s shoes - maybe even someone who you know would disagree with you.
4 Anchoring bias
Let’s say you’re given 10 pieces of information in a presentation.
Anchoring bias directs you to rely heavily on the first piece of information presented to you. It’s a common trick that people will use to sway your decision-making in their favour.
It literally anchors you to think and act in a certain way.
How to overcome it:
List out all the distinct pieces of information you receive. Shuffle them around, and then look at the list again. This lets you see the information in a new structure and let you take something different away from it.
Even after shuffling the information, it’s helpful to come up with arguments against the first piece of information to really challenge those anchors.
5 Hot hands fallacy
You’ve just closed 3 sales in a row.
The hot hands fallacy is making the false assumption that you have a higher chance of closing the 4th sale too, simply because you’re on a winning streak.
You could still close the sale, but putting too much weight on your hot hands will set you up for complacency.
The winning streak will eventually stop.
How to overcome it:
Treat each new event as independently as possible.
By focusing on the task at hand, and not relying on the positive emotion of previous successes, you’re more likely to keep that winning streak up.
Recognise that winning streaks inevitably come to an end. Prepare yourself for the eventual break in success, be ready to learn from the new information that comes from it.
6 Sunk cost fallacy
You’ve spent 4 years in college majoring in pre-med, 4 years at med school, and 2 years training to be a surgeon.
But in your heart, you know that you want to be a programmer.
The sunk cost fallacy is the story you tell yourself to continue on the path that’s not for you, based on the time, money and effort you’ve already invested in getting this far. You say, “I’ve worked so hard to get here, it would be a shame to let that all go to waste. Besides, it’s only 3 more years until I’m a qualified surgeon.”
It’s probably the most dangerous one of the lot.
How to overcome it
Whenever starting projects or goals that require big investments in time, money or effort, set Go/No-Go milestones. At each milestone, give yourself the opportunity to cut your losses if the returns aren’t coming in as expected.
Recognise that in life, the sunk cost is also a story you tell yourself. You’ll have learnt something and you’ll be able to apply it to whatever you do next - as long as you recognise it as an asset and not a cost.
7 Attribution bias
You’re reviewing a report that one of your colleagues has written, and notice some mistakes.
Immediately, your thoughts scream, “That stupid asshole! How can he be so incompetent?!”
Of course, the real reason might be that he was overworked, or had incorrect data to start with. And of course, it definitely couldn’t be anything you did wrong, like not briefing him properly…
Attribution bias is just that - assigning the cause of something wrongly to other people or their character, rather than viewing the situation for what it is.
It’s dangerous because the story you automatically come up with could tint your perspective on how you act and make decisions in the future.
How to overcome it
Take a step back after any type of negative situation. Lay out the hard-hitting facts, and cut out the made-up stories. From here, it’s easier to be more objective with how you interpret events.
Put yourself in the other person’s shoes. They may well be incompetent… but is there a chance it could be anything else?
8 Framing effect
You want to buy some enterprise software.
Would you buy the tool that “automates 95% of the admin”, or the tool that “leaves only 5% of admin un-automated?” I’d bet the former, even though both pieces of software are equally good at automating admin.
Nobody likes the sound of letting admin go un-automated.
The framing effect makes us choose one of these options over another, even though they are both the same. Based on how the information is presented, we feel more inclined to pick the one which sounds better.
How to overcome it
No getting away from some simple high-school math here - the best thing you can do is re-frame the information yourself. Change the frame from positive to negative, and see how your opinion changes with it.
This helps you tease apart your perception of the information from the raw information itself.
9 Halo effect
You’re thinking of promoting John, a software developer, to manage a team of developers.
John’s reliable, his code reviews are thorough, and he works hard.
So you assume he’ll also be a strong manager. But it turns out he’s not great at dealing with people or delegating tasks properly.
This is the halo effect - you assume that positive impressions in the past, or in one domain automatically transfer to the future, or other domains.
How to overcome it:
First, recognise that even though some roles and tasks might be similar, that does not make them the same.
Then, like the hot hands fallacy, treat each role independently, and avoid making blanket judgements without supporting evidence.
10 Overconfidence bias
You’re on a call with the CEO.
She asks you how likely it is your team will meet this quarter’s sales targets. You reply, “I’m confident we’ll make 100% of the predicted sales.”
But the data analyst in the back room crunches the numbers and actually finds that based on historical data, you’re only on track to get 80% of what you hoped.
Overconfidence bias is this all-too-common finding that the confidence in your prediction is generally not the same as the the expected outcome in reality.
How to overcome it
Don’t ask people how confident they are about anything! The future is unpredictable, and you need better information than baseless opinions from people who are trying to impress you. I’m 100% sure of it 😉.
If you must ask people how confident they are, take their answer with a pinch of salt.
11 Survivorship bias
An investor is trying to convince you that they’d be a strong partner for your company.
They boast that their investments have doubled in value over the last 5 years because of the support they offered to their portfolio companies, and they can do the same for you.
When you dig in, it turns out that out of 10 investments they made, only 1 was successful at increasing its value by 20x. The other 9 failed.
The fund’s performance is skewed by survivorship bias - the one company that succeeded gave the fund all its returns. But the failures tell a different story.
How to overcome it:
Any time you are looking at the top-level success of a company, person, or fund, always ask yourself how many losers there had to be for the winners to surface and tell their tales of success.
This video from Derren Brown is another great example of survivorship bias at work.
12 Attentional bias
You’re a junior investor at your firm.
You find a company called AirDnD that lets people rent out spare rooms to short-term lodgers through an app. Enamoured by the success of AirBnB (and the convenient fact that AirDnD’s nerdy founder went to your college), you think the company is a good investment. You ignore the red flags like their inexperienced team, and a competitive market.
Your judgement is biased because your attention is biased.
Attention is the only currency that matters. What you pay attention to determines your reality. So when you pay attention too selectively, you skew your perception of the truth.
How to overcome it:
It’s very tricky to overcome attentional bias. How can you start paying attention to things you subconsciously ignore?
One way is to get a different person to evaluate the same information. Do they come to the same conclusion as you? If not, what did they pay attention to that you ignored? Beware of any biases they might have.
Take more time and get some space. Look at the information again the following day, with a fresh perspective. You might see what you missed.
Actively and honestly ask yourself: what inconvenient facts am I trying to ignore here?
13 Apophenia
You notice that Steve Jobs always wore blue jeans and a black turtleneck.
Given how successful Apple is, you think, “Maybe if I wear the same thing and give the same impression, people will perceive me and my company the same way.”
Elizabeth Holmes tried exactly this - and failed miserably.
Humans are pattern-seeking machines, but not all patterns we see are true. That’s apophenia - trying to force meaning in patterns that don’t exist.
How to overcome it
For every pattern you find, try to find another few alternatives. Notice how the pattern you initially thought was real might not feel so solid any more. There might be a better explanation.
When you do notice a pattern, ask yourself how you could test that the pattern actually exists. What conditions would you need to break the pattern?
Summary
That’s it really - 13 of the most common cognitive biases that can affect decision making.
If we try to pull out some basic principles for how to overcome all of them, they are to:
Know that the biases exist - which you do now, thanks to this article.
Always question the completeness of the information in front of you.
Always question the story you tell about the information you’re trying to make sense of.
QUESTION for the comments: looking back at some recent decisions you’ve made, can you recognize some of these biases at play?
One Liners
“Rock bottom is the best place to build a foundation.”
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“Wherever you go, there you are.”
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“Living is a lot like surfing. You can be the best in the world, but if the wave is not there, there is no performance”
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Recommended reading from Substack:
📱
’s analysis of pre-teen brains on social media.🤲
explores the power and value of kindness.💸
on why teaching your kids about money can be better than an inheritance.🙏
shows us how we can find gratitude in troubling times.💭
shines a light on the power of forgetting.
Recommended reading beyond Substack:
Thinking, Fast and Slow - Daniel Kahneman.
Song of the week:
This is a great breakdown of cognitive biases! I especially like the "One-Liners" and the "Recommended reading" sections at the end.
I agree knowing the biases is good but very hard to overcome. Even Kahneman has this to say (https://www.samharris.org/podcasts/making-sense-episodes/150-map-misunderstanding): when asked if he is any different given what he understands about science after five decades of research. Kahneman’s response may surprise you: "Not at all. In terms of my intuitions being better than they were — no. And furthermore, I have to confess, I’m also very overconfident. Even that I haven’t learned. It’s hard to get rid of those things."
He won a Nobel Prize for his work on behavioral psychology/economics, and he still doesn’t believe it’s helped him overcome his built-in biases.