Cognitive Bias Examples

Cognitive bias is a characteristic of all human beings to make “a systematic error” in judgment and decision-making. This may be due to cognitive limitations, motivational factors, or adaptations to natural environments.

A wide range of mental processes such as heuristics, framing (interpreting the presentation of a scenario), mental noise (inner thoughts), emotional motivators, and social influences are responsible for these biases.

These decision-making shortcuts often lead to perceptual distortion, inaccurate judgment, illogical interpretation, and irrationality. Cognitive biases are studied in various fields like clinical judgment, entrepreneurship, finance, and management. Israeli researchers Amos Tversky and Daniel Kahneman introduced the concept of cognitive bias in 1972.

Examples of Cognitive Bias

#1. Actor-observer Bias

Actor-observer bias is the tendency to attribute your own actions to external situations and others’ actions to their personalities. This means you often blame the situation while explaining your own behaviour and think it’s because of their personality or character while explaining someone else’s behavior.

When people are actors (who are performing an action), they always consider external factors influencing their behavior. When people are observers (who are observing other people’s actions), they do not consider these external factors and attribute others’ actions to their personalities.

For example, you think it is genetics that is responsible for your high cholesterol level, while you consider poor diet and lack of exercise the reason behind other people’s high levels of cholesterol.

#2. Anchoring Bias

Anchoring bias refers to our tendency to rely heavily on the first piece of information we are given about a topic. Now, when this “anchoring” information becomes a point of reference, our perception of the situation can become skewed.

After getting this first piece of information, we start interpreting newer information from the reference point of our anchor instead of seeing it objectively. For example, after seeing the original, non-discounted price of a product, you find a discount offer as a great deal! However, after seeing a discount offer, you find the original, non-discounted price unreasonably high.

#3. Attentional Bias

Attentional bias refers to our tendency to focus on certain elements while ignoring others. Although we should examine all options before making a decision, we end up directing a much larger share of our focus toward a single option due to the attentional bias.

For example, while evaluating the performance of an employee, supervisors might focus too much on a particular measurement of the employee’s productivity, and end up ignoring other valuable indicators of performance.

#4. Availability Heuristic

Availability heuristic refers to our tendency to rely on the information that immediately comes to our mind while making any particular decision. This bias can lead to bad decision-making because easily recalled memories might have low-quality information to form the basis of our decisions.

For example, while considering two employees for promotion who have a steady employment record, a manager may become the victim of availability bias and make the decision based on a recent incident/memory associated with employees.

#5. Confirmation Bias

Confirmation bias refers to our tendency to give more importance to evidence that fits with our existing beliefs. Confirmation bias often leads to poor decision-making as it distorts the reality from which we draw evidence.

For example, a manager believes that ‘hard work’ is the key to success. There is a decline in sales, and the manager believes it is due to the staff not working hard enough. However, when the manager consults with other people, some other factor is found to be responsible for the decline in sales instead of the ‘hard work’ factor.

#6. Loss Aversion

Loss aversion is a cognitive bias that refers to our tendency to put more effort into avoiding losing a thing than earning it. It has been found that losing money, or any other valuable object, is more painful than pleasure in gaining the same thing.

It is a human tendency to avoid incurring loss, and it often prevents us from taking even well-calculated risks. For example, an individual avoids buying new stocks and puts more effort into holding his existing stocks due to the potential risk of losing money.

#7. Gambler’s Fallacy

Gambler’s fallacy refers to our tendency to believe that an event that happened in the past may be repeated in the future. This bias makes us believe that past events can somehow change or impact future probabilities.

For example, a footballer won the fourth game in a tournament after losing the previous three games. Now, in a new tournament, he again loses the initial three games, and when he enters the fourth game, he starts believing that he will win the game based on his previous performance; however, he ends up losing the fourth game. The footballer’s belief that he would win the fourth game was a result of gambler’s fallacy.

#8. False Consensus Effect

The false consensus effect is a cognitive bias that refers to our tendency to believe that our personal attributes and lifestyle are more common or widespread than they actually are. Due to this bias, people often project their personal attitudes and ideas onto others.

This bias fosters a sense of overconfidence in our viewpoints due to which our social perceptions and interactions are significantly impacted. For example, a fitness enthusiast works out daily and maintains a strict, healthy diet, and he/she feels healthy and energetic by doing this.

Now, he/she believes that everyone will feel the same if they start following the same lifestyle. However, when he/she discusses this with his/her family members and friends, it is found that they don’t share the same commitment to fitness and nutrition.

#9. Functional Fixedness

Functional fixedness is a cognitive bias that limits our ability to use an object in more ways than it is traditionally used. Functional fixedness limits our ability to become creative and innovative due to our strong preconceived notions about the functioning of an object.

For example, when you need a paperweight, you don’t use any other heavy object as you are fixated on your need for a paperweight. This bias affects your ability to problem-solve and innovate as it causes you to look at a problem in only one specific way.

#10. Halo Effect

The halo effect refers to our tendency to judge a person, place, or thing based on a single characteristic or trait. The halo effect hinders our ability to think critically, and it often leads to biased assessments and inaccurate judgments.

It happens when we start making positive assumptions or judgments about people based on something positive we notice in them. In reality, we don’t know much about them, and we subconsciously attach a “halo” to them anyway because we think they seem nice.

For example, when you fall in love with someone and start dating the person, everything goes well in the beginning as both of you make positive impressions about each other, and you might not notice the downsides as much, or even not at all. However, this halo effect may fade over time, and you might start finding your partner’s actions to be unpleasant and intolerable and end up terminating the relationship.

#11. Misinformation Effect

The misinformation effect is a cognitive bias due to which our original memory about an event is altered because of post-event information. Due to this bias, your memory is influenced by what you hear about the event from others.

This cognitive bias plays a significant role in areas like eyewitness testimony, which could determine criminal guilt. Misleading information may simply overwrite the original memory, or it can blend with the original memory to create a hybrid. For example, our childhood memories may be altered by the stories told by our family members or neighbours.

#12. Optimism Bias

Optimism bias is a cognitive bias due to which we believe that we are less likely to suffer from misfortune and more likely to attain success than our peers.

This bias might cause us to ignore important information that can make or break our outcome. For example a person opens a coffee shop in an area where six coffee shops failed previously; however, he/she is confidant over his skills and thinks that the coffee shop will be a success in the same area.

In this case, the person ignores the advice by other people that the are was not suitbale for the coffee shop as it is not accessible by poedestrians.

#13. Self-serving Bias

Self-serving bias refers to our tendency to blame external factors when we fail and give credit to ourselves when we succeed. This cognitive bias is often compared to the fundamental attribution error.

Self-serving bias limits our ability to learn from our mistakes, and it affects our decision-making. For example, when a student gets good marks, he gives credit to his/her hard work and skills; however, when a student gets poor marks, he/she blames external factors like a teacher’s inability to teach the subject, unavailability of study material, etc.

#14. The Dunning-Kruger Effect

The Dunning-Kruger effect is a cognitive bias that refers to our tendency to overestimate/underestimate our own competence. Due to this cognitive bias, you may not know what you are good at. If you excel in a given area, the Dunning-Kruger effect makes you assume that the task is simple for everyone.

For example, if you grasp a new language within a few days, you might assume that it’s easy for everyone to learn this new language.

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