Monday, August 26, 2013

Managing Cognitive biases

I picked up Rolf Dobelli's book called "The art of thinking clearly" recently at a book store.  After reading several chapters, I liked it very much, as  I can relate each chapter to my life own experiences. As an example, consider Reciprocity bias, which plays out usually in our lives. In one example,  people are triggered  to  donate to Charities when they receive a small  free gift. I have been a donor to few charities. But the sight of a free gift mostly weighed my action.  I was able to break out of this bias, when I became aware of this bias,  and was able to stick to my  specific objectives related to my donations.

Rolf's book  lists 99 biases, though it does not aim to be comprehensive. The main point from his book is that we are wired to be intutive and it takes lot more energy to think well for making a decision. He advises us to use the intutive decision making for  the circle of competence and use the checklist  of cognitive biases for any decision with major consequences. Of course, we need to be aware of the  feature positive effect (which is one more bias), when using checklists, as we give more weight to what is on the checklist than to what is not.

How can we use this to be better at  our professional roles.  For each decision making  situation it is advisable to look for one potential bias from the book and then use the first level cross references listed at the end of the chapter for other biases. So when we are submitting a project proposal, we know that we may be over confident in our estimates. So look up over confidence in the index. which leads us to  Overconfidence Effect and then to Illusion of skill, Forecast illusion, Strategic misrepresentation, Incentive Super response Tendency and Self Serving biases cross referenced from that chapter. By reviewing these, we may be able to make a better decision.

In an organization with mature processes, the decision making step would be preceded by various information gathering and analysis steps, involving more number of people, which could act to counter the cognitive biases to a large extent.

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