The Ontario Broker - Volume 21, Issue 4 - 47

INDUSTRY & MARKETS
Research Rabbit Holes | Faulty Minds
H
uman brains evolved to hunt
and gather. Most of us don't
rely on wild rabbits to get
by anymore, but now that
same ancient hardware our
ancestors were running is all we have to
navigate today's complex world. To each
of us, our individual perceptions of reality
seem like the logical, unbroken, obvious
truth-but it's just a convenient illusion
our brains tell us to get us through the
day. Our perspectives are heavily shaded
by biases that affect every one of us.
CONFIRMATION BIAS
MEMORY
We all know people who live in the same area, watch the same news
and somehow come away with political beliefs totally opposite to
our own. It can seem unbelievable at times. Confirmation bias goes a
long way to help explain this.
Our brains work very hard to protect our concept of ourselves.
We view our beliefs as being foundational to who we are. When
someone is confronted with information that contradicts their
beliefs it can feel like an attack on who they are as a person.
That's when the brain steps in to rationalize away the threatening
information, dismissing the source or the information itself.
Conversely, when someone happens upon information that confirms
their prior beliefs, their brain rewards them with a little hit of
dopamine.
This is why many people seem so impervious to new information.
No matter what facts or figures they're provided, their position never
changes. And if that reminds you of someone you know, just a guess
that they're someone you don't agree with-confirmation bias at
work yet again.
STATUS QUO BIAS
Companies fail to pivot to profitable models. People stay in bad
relationships. And America still uses the imperial system. Ever wondered
why some things never seem to change? It's because when given the
option to change things, even when the new state of things would be
objectively better, humans default to keeping things the same.
This is partially because we tend to give more weight to the cost of
a potential loss caused by a change and less weight to the potential
gains-even if those gains are objectively higher. We also have an
aversion to being responsible for selecting change, as opposed to
passively accepting how things are. This allows us to avoid feeling
culpable despite the fact we made a choice in both cases. The
combination of these two effects lead people to disproportionately
prefer choices that maintain the status quo. Which is why we'll forever
be stuck with Daylight Saving Time despite the fact that no one can tell
you what its purpose is and most people actively dislike it.
VOLUME 21 | ISSUE 4
While there are many biases that affect decision-making and the
formation of beliefs, there are also a host of biases that affect our
memory. Our experience of our memories is that they're like a video
clip of a past event we can bring up from the hard drive of our brain,
but nothing could be further from the truth. Every time we recall a
memory, we're actually reconstructing that memory, more so based
on the last time we recalled it than on the original event itself. It's
like you're playing a children's game of telephone by yourself, with
each recollection introducing new distortions. Distortions can be
caused by information you've taken in since the initial occurrence
(the misinformation effect), they be can self-serving, making our
actions seem better than they were (the egocentric bias) and they
can even be complete fabrications thanks to the way our brains
don't really separate things we imagined from things we experience.
This is why it's always good to keep a record of important things
rather than relying on your memory alone, because it's far more
fallible than it might seem.
" Learning about cognitive biases is a
good first step to recognizing when
you might be falling prey to them. "
THE GOOD NEWS
There are dozens of recognized cognitive biases that affect us every
day. Learning about them is a good first step to recognizing when
you might be falling prey to them-podcasts like Hidden Brain,
Invisibilia and You Are Not So Smart are all great introductions to
these phenomena. However, the best cure for psychological biases
is talking an issue out with other people. If you're unsure whether
you're thinking clearly about something, bouncing your thoughts off
others helps widen the perspective available to you much more than
the narrow tunnel or vision our individual experience provides us.
47
The Ontario Broker - Volume 21, Issue 4

Table of Contents for the Digital Edition of The Ontario Broker - Volume 21, Issue 4
