Monday, May 21, 2012

Curse of knowledge and other cognitive biases that lead to wrong decision making


A person may be consciously biased towards or against an ideology, a political party, a religion, a creed, a caste, a country, an ethnic group etc. But a cognitive bias is different from such conscious partisanship. Cognitive bias is an unconscious psychological process which guides the individual in decision making without the individual’s conscious awareness. It is the result of perceptual distortion, inaccurate judgment, or illogical interpretation of facts. A conglomeration of these is called irrationality.
Cognitive biases are the result of distortions in the human mind that always lead to the same pattern of poor judgment, often triggered by a particular situation. But how can one person decide the judgment of another person poor? In order to decide the judgment to be poor there should a standard of “good judgment”.  In scientific investigations of cognitive bias, the source of “good judgment” is that of people outside the situation which is presumed to cause the poor judgment or a set of independently verifiable facts.
Positive side of cognitive biases
According to the evolutionary psychology some cognitive biases are adaptive and beneficial because they lead to more effective actions in given contexts or enable faster decisions when faster decisions are of greater value for survival or reproduction.  
Some common cognitive biases
Anchoring
This common cognitive bias is also called focalism. It refers to a common human tendency to rely too heavily, or “anchor” on one piece of information when making decisions. During normal decision making anchoring occurs when individuals overly rely on a specific piece of information to govern their thought-process. Once the anchor is set, there is a bias toward adjusting or interpreting other information to reflect the “anchored” information. Through this cognitive bias, the first information about a subject can affect future decision making and analysis of new information. For example when a person looks to buy a used car he/she may focus attention excessively on the distance travelled by it as indicated by the odometer rather than considering how well the engine or the transmission is maintained.
Focusing effect
Daniel Kahneman 
It is also called focusing illusion. This cognitive bias occurs when people place too much importance to an event, causing an error in accurately predicting the utility of future outcome.  In economics utility means a measure of satisfaction. People focus on notable differences, excluding those that are less conspicuous, when making predictions about happiness or convenience. For example, a rise in income has only a small and transient effect on happiness and well-being, but people consistently overestimate this effect. Nobel laureate Israeli-American psychologist Daniel Kahneman and associates proposed that this is as a result of a focusing illusion, with which people focusing on conventional measured of achievement rather than on everyday routine. Kahneman writes: “Surveys in many countries conducted over decades indicate that, on average, reported global judgments of life satisfaction or happiness have not changed much over the last four decades, in spite of large increase in real income per capita. While reported life satisfaction and household income are positively correlated in a cross-section of people at a given time, increase in income has found to have mainly transitory effect on individuals’ reported life satisfaction.” (Would You Be Happier If You Were Richer? By Daniel Kahneman et. al. CEPS Working Paper No. 125 May 2006)
Confirmation Bias
The confirmation bias refers to the tendency to selectively search for and consider information that confirms one's beliefs.
Examples: A student who is going to write a research paper may primarily search for information that would confirm his or her beliefs.  The student may fail to search for or fully consider information that is inconsistent with his or her beliefs.
A reporter who is writing an article on an important issue may only interview experts that support her or his views on the issue.
An employer who believes that a job applicant is highly intelligent may pay attention to only information that is consistent with the belief that the job applicant is highly intelligent.
Curse of knowledge
Robin Hogarth 
The curse of knowledge is a cognitive bias according to which better-informed individuals may have the disadvantage that they lose some ability to understand properly the lesser-informed individuals. As such added information may convey some disutility. The term “curse of knowledge” was coined by the film and TV music composer Robin Hogarth. In one experiment, one group of participants "tapped" a well-known song on a table while another group listened and tried to identify the song. Some "tappers" described a rich sensory experience in their heads as they tapped out the melody. Tappers on average estimated that 50% of listeners would identify the specific tune; in reality only 2.5% were able to. This means that the better informed individuals failed to understand properly the lesser informed individuals.  It has been argued that the curse of knowledge could contribute to the difficulty of teaching.
Conservatism
It is a cognitive bias. In 1973 British psychologist Glenn Wilson published an influential book providing evidence that a general factor underlying conservative beliefs is “fear of uncertainty.” An analysis of research papers in 2003 established that not only fear of uncertainty but many other psychological factors like intolerance of ambiguity and need for “cognitive closure” contribute to the degree of one’s political conservatism. The term cognitive closure has been defined as “a desire for definite knowledge on some issue and eschewal of confusion and ambiguity.” (European Review of Social Psychology No. 18 pps. 133-173)
Availability bias
Availability bias is a cognitive bias that causes many to overestimate probabilities of events associated with memorable or dramatic occurrences. More than a bias, it is a “cognitive illusion.” Since, memorable events are further magnified by coverage in the media; the bias is compounded on the society level. Two well-known examples would be estimations of the probability of plane accidents and the kidnap of children. Both events are quite rare, but the huge majority of the population outrageously overestimates their probability, and behaves accordingly. In reality, one is more likely to die from an automobile accident than from a plane accident, and a child has a higher risk of dying in an accident than the risk of getting kidnapped. Availability bias is at the root of many other human biases.

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