Nudging, Cognitive Bias and Us

Sophie Wallis, Upthink, and member of the Perth City Chapter, writes that we know from behavioural science that our brain responds to the complexities of daily life by seeking out simple rules of thumb – shortcuts called ‘heuristics’. And that these impact many of our decisions, in both our personal and our professional lives.

React? Or Think?

Daniel Kahneman (also a Nobel Prize winner) first described three of them in the 1970s:

• The ‘anchoring’ effect which can influence our ability to accurately estimate, as we will naturally tend towards a suggested figure or starting point.   Ed: Over 5 years I conducted hundred of market simulation experiments in which we varied the market rules, available information and incentives. Every time the market conditions changed, the participants were informed – yet they still initially tended towards the equilibrium prices that had been determined in earlier experiments even though they knew this was a different market. It was an ‘anchor’.
• ‘Availability’ This is where we easily recall readily available stories, even if they don’t represent the bulk of evidence. Following a high profile but rare disaster, we are more likely to focus on the risk of this occurring again than on more probable, less visible risks. Conversely, the more we hear about successful innovations in infrastructure, the more achievable they will seem. Knowing about ‘availability’ helps us understand just why it is so hard to change the status quo towards something unfamiliar for which we have no examples yet.
• ‘representativeness’ – ‘a man hears what he wants to hear and disregards the rest’ (Paul Simon, not a Nobel Prize winner) which might blind us to the validity of other’s points of view, to stereotype people. Have you ever been at a community consultation session, and been surprised by the insight of a local resident? Perhaps you had made a judgement based on the person’s appearance, assumed a level of education and not expected they’d be capable of such understanding. They are. And you’re deciding on their infrastructure.

Question:  Being aware of our natural human cognitive biases is the first step in being able to counter them.   How have these biases impacted your decisions, or the decisions of others affecting you in the past?