It is common to see the advertisement posters on Tokyo metro which is where I happened to see the poster of this book one day. The poster mentioned that the book being an international best seller had been translated into 29 languages worldwide and had been released in Japan as well. Out of curiosity did a quick search on google and found a lot of positive reviews too. My honest opinion after reading the book is that it is a good read and is all about the cognitive biases and misconceptions that we grow up with or are accustomed to. The author tries to highlight many such instances and provokes the reader to take more conscious decisions in life and work. Rolf Dobelli, the Swiss novelist has a PhD in philosophy. He is the founder or co-founder of several companies and is best known world over for this bestselling book “The Art of Thinking Clearly”.
I will list a few of the biases that caught my attention in this book.
- Survivorship bias – People systematically overestimate their chances of success because triumph is made more visible than failure. Guard against it by frequently visiting the graves of failures, be it once promising projects, careers, startups etc., which should clear one’s mind. Also this influences one more fallacy called the base rate neglect.
- Herd Instinct/Social proof – This follow the crowd instinct exists in fashion, management techniques, hobbies, religion, diets etc. This may be absurd in many cases and may be of value in some, so be conscious of your choices. This flaw is associated with the groupthink tendency as well.
- Concorde effect – Also called “sunk cost fallacy” is an irrational behavior that is driven by a need for consistency and applies to time, money, energy etc. No matter how much you have already invested, only your assessment of the future costs and benefits counts.
- Availability bias – We create a picture of the world using the examples that most easily come to mind. Also if something is repeated often enough, it gets stored at the forefront of our minds and that may not even have to be true. Spending time with people whose experiences and expertise are different from yours may help to overcome this.
- Illusion of control – We think that we are in control of things in life that may be as small as picking a lottery with our own lucky hands but the reality is the opposite. So lets think carefully about our region of influence and focus on that.
- Incentive Super-Response Tendency – People respond quickly and radically when incentives come into play. Also the point to note is that people respond to incentives themselves and not to the grander intentions behind them. Hence, if a person’s or an organization’s behavior confounds you, ask yourself what incentive might lie behind it. In most of the cases, the behavior will be driven by some or the other incentives.
- Outcome bias – Never judge a decision purely by its result, especially when randomness and external factors play a role. So rather than tearing your hair out or applauding yourself based on the result, remember why you chose what you did. Were your reasons rational and understandable? Then you would do well to stick with the method, even if you didn’t strike it lucky last time.
- Paradox of choice – A broader selection leads to poorer decisions and discontent. And yet selection is the yardstick of progress. So think carefully about what you want before you inspect the existing offers. Write down these criteria and stick to them rigidly. In this age of unlimited variety “Good enough” is the new optimum.
- Halo effect – The halo effect occurs when a single aspect dazzles us and affects how we see the full picture. This obstructs our view of true characteristics. To counter this, go beyond face value. For example business journalists should judge a company by something other than its easily obtainable quarterly figures. Dig deeper, invest the time to do serious research. What emerges is not always pretty, but almost always educational.
- Hedonic Treadmill – This effect means that we work hard, advance, and are able to afford more and nicer things and yet this doesn’t make us any happier. So lets use the rubber stamped pointer to make better and brighter decisions:(a)Avoid negative things that you cannot grow accustomed to, such as chronic stress. (b)Expect only short term happiness from material things. (c)Aim for as much free time and autonomy as possible in-order to be active, follow your passions, invest in friendships etc.
- Hyperbolic discounting – This plainly means that, the closer a reward is, the higher our “emotional interest rate” rises and the more we are willing to give up in exchange for it. Though instantaneous reward is incredibly tempting, hyperbolic discounting is still a flaw. The more power we gain over our impulses, the better we can avoid the potential trap.
- Affect heuristic – An affect is a momentary judgement: something that you like/dislike and heuristic means mental shortcuts. For example the word luxury triggers a positive feeling and the word gunfire a negative one. Affect heuristic puts risks and benefits on the same sensory thread instead of a one dimensional feeling. Whether we like it or not, we are puppets of our emotions. We make complex decisions by consulting our feelings, not our thoughts.
- Social comparison bias – This is the tendency to withhold assistance to people who might outdo you, even if you look like a fool in the long run. For example, this tendency is a cause for concern with the start up companies. Top companies or the A-players hire people even better than themselves. Whereas, B/C-players hire people so that they can feel superior to them which will eventually lead to a pack of underdogs.In the short term, the preponderance of stars can endanger your status, but in the long run, you can only profit from their contributions.
- Domain Dependence – Insights do not pass well from one field to another. Business is teeming with domain dependence. A talented marketing mind may be promoted to CEO and suddenly finds that he lacks any strategic creativity. What you master in one area is difficult to transfer to another.
- Twaddle tendency – Here, realms of words are used to disguise intellectual laziness, stupidity or underdeveloped ideas. Sometimes it works, sometimes not. This exists in sports, academics, commerce etc., The worse off a company is, the greater the talk of the CEO. Verbal expression is the mirror of the mind. Clear thoughts become clear statements, whereas ambiguous ideas become vacant ramblings.