Navigating Life's Choices: Strategies to Combat Cognitive Biases

Host: 00:00:00

Hi all.

Host: 00:00:01

Welcome to this audio project where we decode the science of human behavior with a twist.

Host: 00:00:05

I'm Parv and this podcast brings to you AI generated conversations that simplify complex hidden patterns that shape our decisions, emotions and actions.

Host: 00:00:15

A while ago, I started using NotebookLM to help me translate academic research that talked about hidden internal patterns that make us us.

Host: 00:00:23

So let's dive in and uncover the unique algorithm that makes you you.

Parv: 00:00:36

Welcome back, everyone.

Parv: 00:00:37

Today we're going to be taking a deep dive into something that I think impacts every decision we make, both at work and in our personal lives.

Parv: 00:00:47

Cognitive biases.

Expert: 00:00:48

Yeah, these are like mental shortcuts our brains use, and sometimes they can lead us astray.

Parv: 00:00:54

We've got a stack of research here and I'm really curious to see how these biases play out in the real world.

Expert: 00:01:00

And what's fascinating is that these biases aren't random.

Expert: 00:01:04

They're predictable patterns of thinking that can result in some pretty consistent errors in judgment.

Expert: 00:01:10

And we're going to explore how these biases show up in four different professions.

Expert: 00:01:15

Management, finance, medicine, and law.

Parv: 00:01:18

So basically, no one is immune.

Expert: 00:01:20

Right?

Parv: 00:01:20

Not even professionals.

Expert: 00:01:22

Exactly.

Parv: 00:01:22

In these high stakes fields.

Expert: 00:01:24

And understanding these biases isn't just about being aware of them.

Expert: 00:01:27

It's about learning how to recognize them in our own thinking and finding ways to mitigate their impact.

Parv: 00:01:32

Okay, so let's start with management.

Parv: 00:01:34

I read this fascinating study by Schwenk, who uses a great historical example to illustrate how biases can creep into decision making.

Parv: 00:01:43

Yeah, apparently the CEO of Montgomery Ward, a major department store back in the day.

Expert: 00:01:50

Right.

Parv: 00:01:51

Completely missed out on a huge opportunity after World War II.

Expert: 00:01:55

That's right.

Expert: 00:01:56

He was convinced the post war economy would mirror the one after World War I, a period of economic downturn.

Parv: 00:02:03

Okay.

Expert: 00:02:04

This representativeness bias led him to believe expansion was a bad idea.

Parv: 00:02:09

Go away.

Expert: 00:02:09

His competitor Sears took a different approach and, well, you can see who dominated the retail landscape for decades after.

Parv: 00:02:16

Yeah, it's amazing how one biased decision can have such long lasting consequences.

Expert: 00:02:20

It really is.

Parv: 00:02:21

But it's not just historical examples.

Parv: 00:02:23

There's research that shows how framing can significantly impact the choices managers make today.

Expert: 00:02:28

Absolutely.

Expert: 00:02:29

Hodgkinson's research highlights this perfectly.

Expert: 00:02:31

Okay, they found that when a strategic decision was framed in terms of potential gains, managers tended to play it safe.

Expert: 00:02:38

But flip the script and present the same decision in terms of potential losses.

Expert: 00:02:44

And suddenly they're more willing to take risks.

Parv: 00:02:46

So it's not just about the information itself, it's about how it's presented.

Parv: 00:02:50

To us.

Expert: 00:02:51

Exactly.

Parv: 00:02:51

That's a really important takeaway for anyone in a leadership position or even just making decisions in their own work.

Expert: 00:02:57

Absolutely.

Parv: 00:02:58

How do you make sure you're not being swayed by the framing of the information?

Expert: 00:03:02

Being aware of the framing effect is a great first step.

Expert: 00:03:05

When you're faced with a decision, try to reframe the information in different ways.

Expert: 00:03:10

Ask yourself, how would I feel about this decision if it were presented as a potential gain versus a potential loss?

Expert: 00:03:17

That simple shift in perspective can help you see the situation more objectively.

Parv: 00:03:24

That's really practical advice.

Parv: 00:03:25

I like that.

Parv: 00:03:26

Now, what about CEO overconfidence?

Parv: 00:03:30

I mean, you need a certain level of confidence to lead, right?

Expert: 00:03:33

Of course.

Parv: 00:03:33

But when does it become a problem?

Expert: 00:03:35

It becomes a problem when it leads to excessive risk taking Moment.

Expert: 00:03:39

Year and Tate's research found that CEOs who displayed overconfidence were more likely to make poor investments and pursue mergers that ended up hurting their companies.

Parv: 00:03:49

So it's not just about feeling confident.

Parv: 00:03:51

It's about being realistic about your ability.

Expert: 00:03:54

Yeah.

Parv: 00:03:54

And the potential downsides of a decision.

Expert: 00:03:56

Absolutely right.

Parv: 00:03:57

What can CEOs or anyone in a leadership position do to avoid falling into this trap?

Expert: 00:04:02

One strategy is to actively seek out dissenting opinions.

Expert: 00:04:06

Surround yourself with people who are willing to challenge your assumptions and point out potential flaws in your thinking.

Expert: 00:04:13

It's also crucial to have a structured decision making process that involves careful analysis of both the potential benefits and risks.

Expert: 00:04:21

Don't just go with your gut.

Expert: 00:04:23

Make sure your decisions are grounded in solid data and a realistic assessment of the situation.

Parv: 00:04:28

Okay, that makes sense.

Expert: 00:04:29

Yeah.

Parv: 00:04:30

So overconfidence can be a real issue in management, for sure.

Parv: 00:04:32

Now let's shift gears to finance.

Expert: 00:04:34

Yeah.

Parv: 00:04:35

I think a lot of people assume finance is purely rational.

Parv: 00:04:39

It's all about numbers and data, right?

Expert: 00:04:42

You'd think so, but the field of behavioral finance has actually emerged to challenge that assumption.

Parv: 00:04:49

Okay.

Expert: 00:04:49

It looks at how human psychology, with all its quirks and biases, influences financial decisions.

Parv: 00:04:55

So even in a world of spreadsheets and algorithms, we can't escape those pesky cognitive biases.

Expert: 00:05:02

Not at all.

Expert: 00:05:03

One classic example is the overconfidence bias, which pops up in finance just as much as it does in management.

Expert: 00:05:10

Baker and Noxinger found that investors tend to predict lower returns for the overall market while expecting their own portfolios to do much better.

Parv: 00:05:18

Oh, wow.

Expert: 00:05:18

It's like we all have this inherent belief that we're better investors than everyone else.

Parv: 00:05:23

So how do we apply that to our own personal finances?

Expert: 00:05:25

Yeah.

Parv: 00:05:26

Should we just assume we're all doomed to make bad investment decisions.

Expert: 00:05:30

Not necessarily.

Expert: 00:05:32

Awareness is key.

Expert: 00:05:33

Recognizing that we're susceptible to overconfidence can help us make more rational choices instead of chasing the hottest stock.

Expert: 00:05:40

Tip.

Expert: 00:05:41

Yeah.

Expert: 00:05:41

Focus on building a diversified portfolio.

Expert: 00:05:44

Don't put all your eggs in one basket.

Expert: 00:05:45

And consider working with a financial advisor who can provide an objective perspective.

Parv: 00:05:51

That makes sense.

Expert: 00:05:52

Yeah.

Parv: 00:05:52

Diversification is something I hear a lot about, but I'm starting to understand why it's so important now.

Parv: 00:05:57

I also read about this thing.

Expert: 00:05:58

Yeah.

Parv: 00:05:59

Called the disposition effect, which sounds particularly tricky to overcome.

Expert: 00:06:04

It really is.

Expert: 00:06:05

The disposition effect describes our tendency to sell winning stocks too early and hold on to losing stocks for too long.

Expert: 00:06:13

It's driven by loss aversion.

Expert: 00:06:16

That feeling of pain we experience when we lose something is stronger than the pleasure we get from gaining the same amount.

Parv: 00:06:23

So we're basically driven by fear rather than logic.

Expert: 00:06:26

In many cases, yes.

Parv: 00:06:27

That sounds like a recipe for bad financial decisions.

Expert: 00:06:30

It can be.

Expert: 00:06:31

You might find yourself stubbornly holding onto a losing stock, hoping it will eventually bounce back, even when all signs point to further decline.

Expert: 00:06:39

The key here is to have a clear investment strategy with predetermined selling points.

Expert: 00:06:44

Decide ahead of time when you'll sell a stock both for profit and to limit losses, and then stick to your plan.

Expert: 00:06:52

That way, you're less likely to be swayed by emotions in the heat of the moment.

Parv: 00:06:56

I love that advice.

Parv: 00:06:58

Having a plan seems crucial in so many areas of life.

Expert: 00:07:01

It is.

Parv: 00:07:02

Especially when it comes to finances.

Parv: 00:07:05

All right, moving on.

Parv: 00:07:06

Let's talk about medicine.

Expert: 00:07:07

Okay.

Parv: 00:07:07

This is a field where those snap judgments and biases could have serious consequences.

Expert: 00:07:13

Absolutely.

Expert: 00:07:14

And what's fascinating is that even experienced doctors with years of training and knowledge can be influenced by these mental shortcuts.

Parv: 00:07:22

Wow.

Expert: 00:07:23

One common bias in medicine is availability bias.

Expert: 00:07:26

Okay.

Expert: 00:07:26

Which is essentially the tendency to diagnose conditions that are easily recalled, perhaps because a doctor has seen a similar case recently.

Parv: 00:07:34

So it's like our brains are saying, hey, I've seen this before, so it must be the same thing, even if that's not necessarily true.

Expert: 00:07:40

Precisely.

Expert: 00:07:41

Mahmid's research showed that resident doctors were more likely to misdiagnose patients if they had recently seen a similar case, even when the symptoms didn't quite match up.

Parv: 00:07:51

Wow.

Parv: 00:07:51

That's a little concerning.

Expert: 00:07:52

It is a bit worrying.

Parv: 00:07:54

It makes you realize how important it is to be proactive in your own healthcare.

Expert: 00:07:58

Absolutely.

Expert: 00:07:59

One way to combat this is to be an active participant in your medical appointments.

Parv: 00:08:03

Okay.

Expert: 00:08:04

Don't be afraid to ask Questions.

Parv: 00:08:06

Right.

Expert: 00:08:06

Clarify anything you don't understand.

Expert: 00:08:08

And if you're not comfortable with the diagnosis, seek a second opinion.

Expert: 00:08:12

Having another medical professional look at your case.

Parv: 00:08:15

Right.

Expert: 00:08:15

Can bring a fresh perspective and potentially catch a misdiagnosis early on.

Parv: 00:08:20

That's great advice.

Parv: 00:08:22

Now, what about omission bias?

Expert: 00:08:24

Okay, okay.

Parv: 00:08:24

I read that this can also lead to errors in medical decision making.

Expert: 00:08:28

Yes.

Expert: 00:08:29

Omission bias describes the tendency to favor inaction over action.

Parv: 00:08:33

Okay.

Expert: 00:08:33

Even when action is statistically safer, it.

Parv: 00:08:35

Seems counterintuitive that a doctor would choose to do nothing.

Expert: 00:08:38

It does, doesn't it?

Parv: 00:08:39

When there's a potentially beneficial treatment available.

Expert: 00:08:41

It is, but it often stems from the fear of causing harm.

Parv: 00:08:45

Okay.

Expert: 00:08:45

Blumenthal, Barbie and Krieger highlight this in their research, citing examples like parents refusing vaccinations due to fears of potential side effects, even though the risks of not vaccinating are far greater.

Parv: 00:08:58

So it's that feeling of, I'd rather not risk doing something that might cause harm.

Expert: 00:09:03

Yeah.

Parv: 00:09:03

Even if doing nothing is actually riskier in the long run.

Expert: 00:09:06

Exactly.

Expert: 00:09:07

And this isn't just limited to medical decisions.

Expert: 00:09:10

We can see this bias play out in our everyday lives, like when we avoid having difficult conversations or putting off important, important tasks because we fear the potential negative outcome.

Parv: 00:09:20

So how do we overcome this bias?

Parv: 00:09:23

Is it just a matter of being braver?

Expert: 00:09:25

It's more about being informed and rational.

Expert: 00:09:29

When faced with a decision, especially one with potential consequences, take the time to weigh the risks and benefits carefully.

Expert: 00:09:37

Don't let fear paralyze you.

Expert: 00:09:39

Seek out evidence based information, talk to experts, and make a conscious decision based on logic and a realistic assessment of the situation.

Parv: 00:09:48

That's cool.

Parv: 00:09:49

Great advice for navigating those tricky decisions, whether it's a medical treatment plan or a challenging situation at work.

Expert: 00:09:55

Absolutely.

Expert: 00:09:56

It's about recognizing that sometimes inaction can be the riskier choice.

Parv: 00:10:00

Okay.

Parv: 00:10:01

Finally, let's turn our attention to the legal profession.

Expert: 00:10:03

Okay.

Parv: 00:10:05

I'm curious to see how biases play out in a field that prides itself on logic, objectivity, and fairness.

Expert: 00:10:12

You might be surprised to learn that even the most experienced judges who are trained to be impartial, aren't immune to cognitive bias.

Expert: 00:10:21

Biases.

Parv: 00:10:21

Wow.

Expert: 00:10:22

Their decisions, just like ours, can be influenced by subconscious patterns of thinking.

Parv: 00:10:27

So even in the courtroom, we can't escape those mental shortcuts.

Expert: 00:10:30

Not entirely.

Expert: 00:10:31

One particularly relevant bias in law is the anchoring effect, which occurs when an initial piece of information, even if it's irrelevant, influences our judgments.

Parv: 00:10:42

So you're saying that something as simple as the Order in which evidence is presented could potentially sway a jury's verdict.

Expert: 00:10:50

It's certainly possible.

Expert: 00:10:52

And there's research to support this.

Expert: 00:10:53

Okay.

Expert: 00:10:54

English and his colleagues conducted a fascinating study where they presented judges with a hypothetical case and asked them to determine the appropriate sentence.

Parv: 00:11:02

Okay.

Expert: 00:11:02

They found that the judges who were first given a higher random number as an anchor.

Parv: 00:11:07

Wow.

Expert: 00:11:07

Even though they knew it was meaningless, Tended to give harsher sentences.

Parv: 00:11:11

That's incredible.

Parv: 00:11:12

So even seemingly insignificant details can have a real impact on legal decisions.

Expert: 00:11:17

They really can.

Expert: 00:11:19

It highlights how susceptible we all are to these subtle influences.

Expert: 00:11:22

And this is why awareness is so important.

Expert: 00:11:25

Judges, lawyers and jurors alike need to be mindful of the potential for anchoring bias and strive to evaluate evidence objectively without being swayed by irrelevant information.

Parv: 00:11:37

So it's about consciously recognizing those anchors and making a deliberate effort to set them aside when making judgments.

Expert: 00:11:44

Exactly.

Expert: 00:11:44

It's about acknowledging that our brains are wired to seek patterns and make connections.

Expert: 00:11:49

But sometimes those connections can lead us astray.

Parv: 00:11:51

Okay, I'm starting to see a theme here.

Parv: 00:11:54

Awareness is key.

Expert: 00:11:55

It really is.

Parv: 00:11:55

But what about hindsight bias?

Parv: 00:11:57

I feel like that one pops up all the time, especially when we're analyzing past events.

Expert: 00:12:02

Hindsight bias, that I knew it all along phenomenon is incredibly common in legal settings.

Expert: 00:12:07

Yeah.

Expert: 00:12:08

Knowing the outcome of a case can make it seem more predictable than it actually was, leading to harsher judgments and a distorted view of responsibility.

Parv: 00:12:17

So if we know someone was injured in a particular situation were more likely to view the defendant as negligent, even if the circumstances were ambiguous at the time?

Expert: 00:12:27

Precisely.

Expert: 00:12:28

Kameen and Ratczulinski's research demonstrated this perfectly.

Expert: 00:12:32

They found that people judging a situation in hindsight were much more likely to see a negative outcome as foreseeable and blame the defendant.

Expert: 00:12:40

Even when the same people judging the situation beforehand didn't think the outcome was likely at all.

Parv: 00:12:46

That's a powerful example of how our knowledge of the outcome can color our perceptions.

Expert: 00:12:51

It really is.

Parv: 00:12:52

How can we combat this bias, especially in legal settings?

Expert: 00:12:55

Yeah.

Parv: 00:12:55

Where it can have serious consequences.

Expert: 00:12:57

One way is to encourage pre mortems before making decisions.

Parv: 00:13:01

Okay.

Expert: 00:13:02

This involves imagining that a decision has already led to a negative outcome and then working backward to identify potential contributing factors.

Parv: 00:13:12

Okay.

Expert: 00:13:12

By considering alternative scenarios and identifying potential pitfalls ahead of time.

Parv: 00:13:17

Yeah.

Expert: 00:13:18

We can reduce the tendency to blame individuals or circumstances unfairly after the fact.

Parv: 00:13:23

That's a really interesting approach.

Parv: 00:13:25

It's almost like flipping the script on hindsight bias.

Expert: 00:13:27

Yeah.

Parv: 00:13:28

Instead of looking back and saying, I knew it all along, we're forcing ourselves to consider all the different ways things could have gone wrong.

Expert: 00:13:35

Exactly.

Parv: 00:13:35

Even if they didn't.

Expert: 00:13:36

Exactly.

Expert: 00:13:36

It's about acknowledging that the past is often more ambiguous than we remember it.

Parv: 00:13:42

Right.

Expert: 00:13:42

And by recognizing that, we can make more informed and fair judgments in the present.

Parv: 00:13:47

Okay, so we've covered quite a bit of ground here.

Expert: 00:13:49

We have.

Parv: 00:13:50

From anchoring to hindsight bias.

Parv: 00:13:52

Is there a key takeaway you'd like to leave our listeners with?

Parv: 00:13:55

When it comes to cognitive biases in the legal profession, I think the most.

Expert: 00:13:59

Important takeaway is that we need to acknowledge the inherent complexity of the legal system.

Parv: 00:14:03

Yeah.

Expert: 00:14:04

It's not always about clear cut answers and easily identifiable villains.

Expert: 00:14:09

Understanding the role of cognitive biases can help us approach legal issues with more nuance and empathy.

Expert: 00:14:15

Recognizing that everyone involved, from judges and lawyers to jurors and witnesses, is susceptible to these subconscious influences.

Parv: 00:14:25

That's a really important point.

Parv: 00:14:27

It's not about pointing fingers or assuming that everyone is intentionally biased.

Parv: 00:14:31

Right.

Parv: 00:14:32

It's about recognizing that these biases are part of the human condition.

Expert: 00:14:36

Absolutely.

Parv: 00:14:37

And finding ways to mitigate their impact so that justice can be served.

Expert: 00:14:41

I completely agree.

Parv: 00:14:42

Wow.

Parv: 00:14:42

We've really explored how these biases can sneak into some pretty important decisions.

Parv: 00:14:46

It's a little unsettling to realize how much our thinking can be swayed by these mental shortcuts, even when we think we're being rational.

Expert: 00:14:54

It is a bit humbling, isn't it?

Expert: 00:14:56

But the point of this deep dive isn't to make us feel bad about our flawed human brains.

Expert: 00:15:00

It's about empowering us to make better decisions.

Parv: 00:15:03

So it's not about becoming perfectly rational robots?

Expert: 00:15:07

Definitely not.

Expert: 00:15:08

We wouldn't want that.

Expert: 00:15:09

It's more about recognizing our own vulnerabilities and developing strategies to counteract those biases.

Parv: 00:15:16

Okay.

Parv: 00:15:16

So if we're all susceptible to these biases.

Expert: 00:15:18

Yeah.

Parv: 00:15:19

What can we actually do about it?

Parv: 00:15:21

Is there a way to de bias ourselves?

Expert: 00:15:24

There's no magic bullet, but there are a lot of practical techniques we can use.

Parv: 00:15:29

Okay.

Expert: 00:15:29

One is simply to slow down our decision making process.

Expert: 00:15:33

When we take the time to pause, reflect, and gather more information, we're less likely to fall prey to those quick, intuitive judgments that can lead to biased decisions.

Parv: 00:15:45

That makes sense.

Parv: 00:15:45

It's like taking a moment to step back and reconsider all angles before jumping to conclusions.

Expert: 00:15:50

Exactly.

Expert: 00:15:51

Another helpful technique is to actively seek out different perspectives.

Expert: 00:15:56

Talk to people who have different backgrounds, experiences, and viewpoints.

Parv: 00:16:00

Yeah.

Expert: 00:16:01

This can help you challenge your own assumptions and see the situation in a new light.

Parv: 00:16:05

That's Great advice for both our professional and personal lives.

Expert: 00:16:08

Absolutely.

Parv: 00:16:09

It's so easy to get stuck in our own echo chambers surrounded by people who think just like us.

Expert: 00:16:13

It is.

Expert: 00:16:14

And that's why it's so important to make a conscious effort to diversify our sources of information.

Parv: 00:16:19

Right.

Expert: 00:16:19

And the people we interact with.

Expert: 00:16:21

It can really enrich our decision making process and help us avoid those blind spots that biases can create.

Parv: 00:16:28

This has been an incredible deep dive.

Parv: 00:16:30

I feel like I've learned so much about how my own brain works and how to make more informed decisions.

Parv: 00:16:37

Any final thoughts for our listeners?

Expert: 00:16:39

Remember, the goal isn't to eliminate biases entirely.

Parv: 00:16:42

Right.

Expert: 00:16:42

That's probably impossible.

Expert: 00:16:44

Yeah.

Expert: 00:16:44

It's about becoming aware of those biases, understanding how they might influence our thinking, and then developing strategies to mitigate their impact.

Expert: 00:16:54

The more we understand about these mental shortcuts, the better equipped we'll be to make choices that align with our values and goals.

Parv: 00:17:02

Absolutely.

Parv: 00:17:03

And keep learning.

Parv: 00:17:04

This is just the tip of the iceberg when it comes to cognitive biases.

Parv: 00:17:07

There's a whole world of research out there waiting to be explored.

Expert: 00:17:11

That's the beauty of it.

Expert: 00:17:12

There's always more to learn, more ways to challenge our thinking, and more opportunities to grow as decision makers.

Parv: 00:17:18

Thanks for joining us on this fascinating journey into the world of cognitive biases.

Parv: 00:17:22

Until next time.

Expert: 00:17:23

Yeah.

Parv: 00:17:24

Keep those mental shortcuts in check and make decisions you can be proud of.

Expert: 00:17:28

Absolutely.

Parv: 00:17:29

Okay.

Parv: 00:17:29

That makes sense.

Expert: 00:17:30

Yeah.

Parv: 00:17:30

So overconfidence can be a real issue in management.

Parv: 00:17:34

Now let's shift gears to finance.

Expert: 00:17:36

Okay.

Parv: 00:17:37

I think a lot of people assume finance is purely rational.

Parv: 00:17:40

It's all about numbers and data.

Parv: 00:17:42

Right?

Expert: 00:17:43

You'd think so, but the field of behavioral finance has actually emerged to challenge that assumption.

Parv: 00:17:48

Okay.

Expert: 00:17:49

It looks at how human psychology, with all its quirks and biases, influences financial decisions.

Parv: 00:17:54

So even in a world of spreadsheets and algorithms, we can't escape those pesky cognitive biases.

Expert: 00:18:01

Not at all.

Expert: 00:18:02

One classic example is the overconfidence bias, which pops up in finance just as much as it does in management.

Expert: 00:18:08

Maker and Noxinger found that investors tend to predict lower returns for the overall market while expecting their own portfolios to do much better.

Expert: 00:18:17

It's like we all have this inherent belief that we're better investors than everyone else.

Parv: 00:18:22

So how do we apply that to our own personal finances?

Parv: 00:18:24

Should we just assume we're all doomed to make bad investment decisions?

Expert: 00:18:28

Not necessarily.

Expert: 00:18:29

Awareness is key.

Expert: 00:18:30

Recognizing that we're susceptible to overconfidence can help us make more rational Choices.

Expert: 00:18:35

Instead of chasing the hottest stock tip, focus on building a diversified portfolio.

Parv: 00:18:39

Okay.

Expert: 00:18:40

Don't put all your eggs in one basket and consider working with a financial advisor who can provide an objective perspective that makes sense.

Parv: 00:18:48

Diversification is something I hear a lot about, but I'm starting to understand why it's so important now.

Parv: 00:18:53

I also read about this thing called the disposition effect, which sounds particularly tricky to overcome.

Expert: 00:18:58

It really is.

Expert: 00:18:59

The disposition effect describes our tendency to sell winning stocks too early and hold on to losing stocks for too long.

Expert: 00:19:06

It's driven by loss aversion.

Expert: 00:19:07

That feeling of pain we experience when we lose something is stronger than the pleasure we get from gaining the same amount.

Parv: 00:19:13

So we're basically driven by fear rather than logic.

Parv: 00:19:17

That sounds like a recipe for bad financial decisions.

Expert: 00:19:20

It can be.

Expert: 00:19:21

You might find yourself stubbornly holding onto a losing stock, hoping it will eventually bounce back, even when all signs point to further decline.

Expert: 00:19:28

The key here is to have a clear investment strategy with predetermined selling points.

Expert: 00:19:33

Decide ahead of time when you'll sell a stock both for profit and to limit losses, and then stick to your plan.

Expert: 00:19:39

That way you're less likely to be swayed by emotions in the heat of the moment.

Parv: 00:19:43

I love that advice.

Parv: 00:19:44

Having a plan seems crucial in so many areas of life, especially when it comes to finances.

Parv: 00:19:49

Alright, moving on.

Parv: 00:19:49

Let's talk about medicine.

Expert: 00:19:50

Okay.

Parv: 00:19:51

This is a field where those snap judgments and biases could have serious consequences.

Expert: 00:19:55

Absolutely.

Expert: 00:19:56

And what's fascinating is that even experienced doctors with years of training and knowledge can be influenced by these mental shortcuts.

Expert: 00:20:03

One common bias in medicine is availability bias.

Parv: 00:20:06

Okay.

Expert: 00:20:07

Which is essentially the tendency to diagnose conditions that are easily recalled, perhaps because a doctor has seen a similar case recently.

Parv: 00:20:15

So it's like our brains are saying, hey, I've seen this before, so it must be the same thing.

Expert: 00:20:19

Yeah.

Parv: 00:20:19

Even if that's not necessarily true.

Expert: 00:20:21

Precisely.

Expert: 00:20:21

Mamede's research showed that resident doctors were more likely to misdiagnose patients if they had recently seen a similar case, even when the symptoms didn't quite match up.

Parv: 00:20:31

Wow.

Parv: 00:20:31

That's a little concerning.

Expert: 00:20:33

Yeah.

Parv: 00:20:33

It makes you realize how important it is to be proactive in your own healthcare.

Expert: 00:20:36

It really does.

Expert: 00:20:38

One way to combat this is to be an active participant in your medical appointments.

Expert: 00:20:42

Don't be afraid to ask questions, clarify anything you don't understand.

Expert: 00:20:46

And if you're not comfortable with a diagnosis, seek a second opinion.

Expert: 00:20:49

Having another medical professional look at your case can bring a fresh perspective and potentially catch a misdiagnosis early.

Expert: 00:20:56

On.

Parv: 00:20:56

That's great advice.

Parv: 00:20:58

Now, what about omission bias?

Parv: 00:20:59

I read that this can also lead to errors in medical decision making.

Expert: 00:21:03

Yes, omission bias describes the tendency to favor inaction over action, even when action is statistically safer.

Parv: 00:21:10

It seems counterintuitive that a doctor would choose to do nothing when there's a potentially beneficial treatment available.

Expert: 00:21:16

It is, but it often stems from the fear of causing harm.

Expert: 00:21:20

Blumenthal, Barbie and Krieger highlight this in their research, citing examples like parents refusing vaccinations due to fears of potential side effects, even though the risks of not vaccinating are far greater.

Parv: 00:21:31

So it's that feeling of I'd rather not risk doing something that might cause harm, even if doing nothing is actually riskier in the long run.

Expert: 00:21:39

Exactly.

Expert: 00:21:40

And this isn't just limited to medical decisions.

Expert: 00:21:42

We can see this bias play out in our everyday lives, like when we avoid having difficult conversations or putting off important tasks because we fear the potential negative outcomes.

Parv: 00:21:51

So how do we overcome this bias?

Parv: 00:21:53

Is it just a matter of being braver?

Expert: 00:21:55

It's more about being informed and rational.

Expert: 00:21:57

When faced with a decision, especially one with potential consequences, take the time to weigh the risks and benefits carefully.

Expert: 00:22:05

Don't let fear paralyze you.

Expert: 00:22:07

Seek out evidence based information, talk to experts, and make a conscious decision based on logic and a realistic assessment of the situation.

Parv: 00:22:16

That's great advice for navigating those tricky decisions, whether it's a medical treatment plan or a challenging situation at work.

Expert: 00:22:22

Absolutely.

Expert: 00:22:23

It's about recognizing that sometimes inaction can be the riskier choice.

Parv: 00:22:27

Okay.

Parv: 00:22:27

Finally, let's turn our attention to the legal profession.

Expert: 00:22:30

Okay.

Parv: 00:22:31

I'm curious to see how biases play out in a field that prides itself on logic, objectivity, and fairness.

Expert: 00:22:37

You might be surprised to learn that even the most experienced judges who are trained to be impartial aren't immune to cognitive biases.

Expert: 00:22:44

Their decisions, just like ours, can be influenced by subconscious patterns of thinking.

Parv: 00:22:49

So even in the courtroom, we can't escape those mental shortcuts.

Expert: 00:22:52

Not entirely.

Expert: 00:22:53

One particularly relevant bias in law is the anchoring effect, which occurs when an initial piece of information, even if it's irrelevant, influences our judgments.

Parv: 00:23:02

So you're saying that something as simple as the order in which evidence is presented could potentially sway a jury's verdict?

Expert: 00:23:08

It's certainly possible.

Expert: 00:23:10

And there's research to support this.

Expert: 00:23:11

English and his colleagues conducted a fascinating study where they presented judges with a hypothetical case and asked them to determine the appropriate sentence.

Expert: 00:23:20

They found that the judges who were first given a Higher random number as an anchor, even though they knew it was meaningless, tended to give harsher sentences.

Parv: 00:23:27

That's incredible.

Parv: 00:23:28

So even seemingly insignificant details can have a real impact on legal decisions.

Expert: 00:23:33

They really can.

Expert: 00:23:34

It highlights how society susceptible we all are to these subtle influences.

Expert: 00:23:38

And this is why awareness is so important.

Expert: 00:23:41

Judges, lawyers, and jurors alike need to be mindful of the potential for anchoring bias and strive to evaluate evidence objectively without being swayed by irrelevant information.

Parv: 00:23:50

So it's about consciously recognizing those anchors and making a deliberate effort to set them aside when making judgments.

Expert: 00:23:56

Exactly.

Expert: 00:23:56

It's about acknowledging that our brains are wired to seek patterns and make connections.

Expert: 00:24:00

But sometimes those connections can lead us astray.

Parv: 00:24:03

Okay, I'm starting to see a theme here.

Parv: 00:24:05

Awareness is key.

Parv: 00:24:07

But what about hindsight bias?

Parv: 00:24:09

I feel like that one pops up all the time, especially when we're analyzing past events.

Expert: 00:24:13

Hindsight bias, that I knew it all along phenomenon is incredibly common in legal settings.

Expert: 00:24:18

Knowing the outcome of a case can make it seem more predictable than it actually was, leading to harsher judgments and a distorted view of responsibility.

Parv: 00:24:26

So if we know someone was injured in a particular situation, we're more likely to view the defendant as negligent, even if the circumstances were ambiguous at the time?

Expert: 00:24:36

Precisely.

Expert: 00:24:36

Kameen and Ratchlinsky's research demonstrated this perfectly.

Expert: 00:24:40

They found that people judging a situation in hindsight were much more likely to see a negative outcome as foreseeable and blame the defendant, even when the same people judging the situation beforehand didn't think the outcome was likely at all.

Parv: 00:24:52

That's a powerful example of how our knowledge of the outcome can color our perceptions.

Parv: 00:24:56

How can we combat this bias, especially in legal settings where it can have serious consequences?

Expert: 00:25:02

One way is to encourage pre mortems before making decisions.

Expert: 00:25:06

This involves imagining that a decision has already led to a negative outcome, and then working backward to identify potential contributing factors.

Expert: 00:25:14

By considering alternative scenarios and identifying potential pitfalls ahead of time, we can reduce the tendency to blame individuals or circumstances unfairly after the fact.

Parv: 00:25:24

That's a really interesting approach.

Parv: 00:25:26

It's almost like flipping the script on hindsight bias.

Parv: 00:25:28

Instead of looking back and saying, I knew it all along, we're forcing ourselves to consider all the different ways things could have gone wrong even if they didn't.

Expert: 00:25:36

Exactly.

Expert: 00:25:36

It's about acknowledging that the past is often more ambiguous than we remember it.

Expert: 00:25:41

And by recognizing that, we can make more informed and fair judgments in the present.

Parv: 00:25:45

Okay, so we've covered quite a bit of ground here.

Parv: 00:25:47

From anchoring to hindsight bias.

Parv: 00:25:49

Is there A key takeaway you'd like to leave our listeners with.

Parv: 00:25:52

When it comes to cognitive biases in.

Expert: 00:25:54

The legal profession, I think the most important takeaway is that we need to acknowledge the inherent complexity of the legal system.

Expert: 00:26:00

It's not always about clear cut answers and easily identifiable villains.

Expert: 00:26:05

Understanding the role of cognitive biases can help us approach legal issues with more nuance and empathy.

Expert: 00:26:10

Recognizing that everyone involved, from judges and lawyers to jurors and witnesses, is susceptible to these subconscious influences.

Parv: 00:26:18

That's a really important point.

Parv: 00:26:19

It's not about pointing fingers or assuming that everyone is intentionally biased.

Parv: 00:26:23

It's about recognizing that these biases are part of the human condition and finding ways to mitigate their impact so that justice can be served.

Parv: 00:26:31

Wow.

Parv: 00:26:32

We've really explored how these biases can sneak into some pretty important decisions.

Parv: 00:26:37

It's a little unsettling to realize how much our thinking can be swayed by these mental shortcuts, even when we think we're being rational.

Expert: 00:26:44

It is a bit humbling, isn't it?

Expert: 00:26:46

But the point of this deep dive isn't to make us feel bad about our flawed human brains.

Expert: 00:26:50

It's about empowering us to make better decisions.

Parv: 00:26:52

So it's not about becoming perfectly rational robots?

Expert: 00:26:55

Definitely not.

Expert: 00:26:56

We wouldn't want that.

Expert: 00:26:57

It's more about recognizing our own vulnerabilities and developing strategies to counteract those biases.

Parv: 00:27:02

Okay, so if we're all susceptible to these biases, what can we actually do about it?

Parv: 00:27:07

Is there a way to de bias ourselves?

Expert: 00:27:09

There's no magic bullet, but there are a lot of practical techniques we can use.

Expert: 00:27:13

One is simply to slow down our decision making process.

Expert: 00:27:16

When we take the time to pause, reflect and gather more information, we're less likely to fall prey to those quick, intuitive judgments that can lead to biased decisions.

Parv: 00:27:25

That makes sense.

Parv: 00:27:26

It's like taking a moment to step back and really consider all angles before jumping to conclusions.

Expert: 00:27:32

Exactly.

Expert: 00:27:33

Another helpful technique is to actively seek out different perspectives.

Expert: 00:27:37

Talk to people who have different backgrounds, experiences and viewpoints.

Expert: 00:27:41

This can help you challenge your own assumptions and see the situation in a new light.

Parv: 00:27:45

That's great advice for both our professional and personal lives.

Parv: 00:27:48

It's so easy to get stuck in our own echo chambers surrounded by people who think just like us.

Expert: 00:27:53

It is.

Expert: 00:27:53

And that's why it's so important to make a conscious effort to diversify our sources of information and the people we interact with.

Expert: 00:27:59

It can really enrich our decision making process and help us avoid those blind spots that biases can create.

Parv: 00:28:06

This has been an incredible deep dive.

Parv: 00:28:08

I feel like I've learned so much about how my own brain works and how to make more informed decisions.

Parv: 00:28:13

Any final thoughts for our listeners?

Expert: 00:28:15

Remember, the goal isn't to eliminate biases entirely.

Expert: 00:28:18

That's probably impossible.

Expert: 00:28:19

It's about becoming aware of those biases, understanding how they might influence our thinking and then developing strategies to mitigate their impact.

Expert: 00:28:27

The more we understand about these mental shortcuts, the better equipped we'll be to make choices that align with our values and goals.

Parv: 00:28:34

Absolutely.

Parv: 00:28:35

And keep learning.

Parv: 00:28:36

This is just the tip of the iceberg when it comes to cognitive biases.

Parv: 00:28:39

There's a whole world of research out there waiting to be explored.

Expert: 00:28:42

That's the beauty of it.

Expert: 00:28:43

There's always more to learn, more ways to challenge our thinking and more opportunities to grow as decision makers.

Parv: 00:28:49

Thanks for joining us on this fascinating journey into the world of cognitive biases.

Parv: 00:28:53

Until next time, keep those mental shortcuts in check and make decisions you can be proud of.

Expert: 00:28:59

Absolutely.