When it comes to making a decision as a team, decision-making biases can severely affect the thought process that goes into decisions, and therefore the quality of the decisions themselves. Teams therefore need to be aware of these cognitive biases and learn ways of managing them. We’ll show you what decision-making biases are and how to limit their reach in the blog post below.
What goes on in our minds when we make a decision? It’s an interesting question, and one that can’t be answered so easily. The truth it’s that there’s a lot happening. We’re combining different understandings, knowledge and information. We’re using our own experience, our “intuition” and facts that we’ve gained from various points in our lives. And, especially if this is a decision relating to something new, we’re also using our imaginations in an attempt to perceive the outcomes of different alternatives.
One set of thoughts also impacts our decision making, sometimes in non-beneficial ways: cognitive biases. You may have heard about cognitive biases before, and maybe even know a few of them. There are many cognitive biases that have been theorized, and they affect all different parts of our cognitive thinking skills.
Here though, we will focus on the ones specifically related to decision making, and the ones that impact it the most. These decision-making biases are important to be aware of when making decisions since, as we shall see, they can affect your ability to judge a situation neutrally or objectively.
We’ll also give you some tools that you can use to avoid these decision-making biases. Of course, you can’t completely change the way you think, especially in a short time. But these tools can help you to slow down and think more intentionally about your decisions, which will help you catch some of these decision-making biases in action.
What are cognitive biases?
First, let’s just quickly explain what exactly cognitive biases are. A cognitive bias can be defined as a “systematic error” in the brain that it makes over and over again. This usually happens because the brain needs to process massive amounts of information. So, over time, it develops shortcuts (“heuristics”) and ways of simplifying information to make things easier to process.
For example, the “functional fixedness” bias makes you associate certain tools with certain tasks and ways of working only. So a hammer will only be associated in your mind with hammering nails. Of course, this happens because your brain knows from experience that hammers usually hammer in nails. But this may cause you to ignore the hammer’s other uses (like taking out nails) or other tools that could be used for the same purpose.
So cognitive bias is related to habit and experience, but it’s also related to emotions as well. Our brains know that we like to feel good, and so cognitive biases are ways to try to make us happy and content as well.
One example of this is the “optimism bias” which makes us believe that bad things are unlikely to happen to us (e.g. we won’t get the flu during the winter so we don’t need to get a shot). This creates a good feeling, and a sense of invincibility and maybe even superiority. But it’s not always beneficial to us to think this way, especially in dangerous or risky situations.
Another interesting point that the optimism bias brings up is that cognitive biases are not always bad. The optimism bias may sometimes influence us to take risks that we wouldn’t have taken otherwise, or lead us to not worry about more minor issues that do not in fact need to bother us.
However, whether there are some benefits or not, cognitive biases need to be carefully monitored. They can also heavily influence our decision-making abilities, which require processing facts and information as neutrally as possible, and lead your team down paths that may not be the best for it in the long-run.
Major decision-making biases
The following is a list of some of the most widespread and impactful decision-making biases. By understanding these decision-making biases, we can be more aware of how to manage them and make our decision-making process more effective.
1. Confirmation bias
This is one of the most well-known cognitive biases out there. This decision-making bias means that we tend to pay attention more to evidence that confirms your previously held beliefs. Obviously, this has negative impacts on decisions by narrowing the scope of our information-gathering. It also limits your thinking to only ideas that conform to your beliefs, rather than opening yourself or your team to new ideas that may challenge them.
2. Availability Heuristic
This decision-making bias leads us to make decisions based on what easily comes to mind. An example of this is advertising. If we see Coca-Cola posters and commercials all over the place, the next time we go to a vending machine, the availability heuristic will make us want to choose a Coca-Cola. Again, this limits the scope of our thinking, and the options available in our decision making.
3. Survivorship bias
The survivorship bias makes us focus on success stories only when a larger context of successes and failures exists. If one company succeeds in doing something, we might follow their example without taking into account the large number of companies that failed. This decision-making bias therefore clouds the larger picture and makes us feel as if we too can succeed despite all the odds, which isn’t always true.
4. Anchoring bias
With this decision-making bias, an initial piece of information tends to set, or “anchor”, our expectations and judgments. This is often used in pricing strategy, where companies will list three prices–one low, one middle, and one high. The middle price anchors our judgment of the right price, so that even if it is overvalued, we might still think it is fair when compared with the other two. Anchoring bias therefore plays into our initial first impressions, which aren’t always accurate.
5. The halo effect
Another decision-making bias that is based on first impressions a lot of the time is the halo effect. This bias makes us continue to believe that someone or something is good because of our experiences in the past, regardless of whether it is true now. We see this a lot with celebrities who do bad things. Many fervent fans, who have supported them for a long time, have a hard time believing that they can commit such acts, despite evidence to the contrary. Obviously, this effect will impact human relationships on teams, especially the hiring and firing of team members, but it can also be applied to plans and ideas as well.
6. The IKEA effect
The idea behind IKEA is that you build all the furniture you buy from them by yourself. Hence the name of this decision-making bias, which reflects how we place a higher value on activities and projects that we have participated in or worked on. This is obviously natural, since we have more experience with them. However, especially when it comes to teams that need to decide which projects to prioritize, it’s important that we take a step back and acknowledge that other projects may be of equal or more importance.
7. Planning fallacy
The planning fallacy has to do with our inability to accurately measure how long a task or project will take. In fact, we tend to underestimate how much time something will take in the short-run, and overestimate how long something will take us in the long-run. This might lead us to take on more than we can handle, or to ignore a project that we think might be too much for us. In this way, the planning fallacy is a very common decision-making bias.
8. Sunk costs bias
The sunk costs bias is another very common decision-making bias that perhaps many of you have heard about. It posits that we tend to continue tasks or projects more if we have invested a lot of time or energy in them, even if it may be better to stop or pivot to something else. So when we make decisions about continuing on a certain path, we really need to look at the situation objectively and weigh the costs and benefits.
9. Progress bias
The progress bias is also concerned with a task or project that we are continuing to do. In this decision-making bias, we tend to only look at the positive benefits of the project, or focus on certain parts that we are making progress on, even if the project as a whole may not be going well. This is very similar to having an overly positive view of a situation. Again, it’s important to take a holistic and honest view in order to see what is actually being accomplished and whether the project should be continued.
10. The bandwagon effect
The last major decision-making bias on our list is of particular importance to teams, since it has to do with how other people affect how we see decisions. With the bandwagon effect, we have a tendency to believe something because many other people believe it, or do something because other people are doing the same thing. While the tendency to want to seek consensus and unity on teams is beneficial, a culture of communication and psychological safety can counteract some of the bandwagon effects that can likely occur.
Ways to manage decision-making biases
As we said before, cognitive and decision-making biases are natural and hard to get rid of completely. They are also very hard to change in a short period of time. But that doesn’t mean that nothing can be done to minimize their effects.
Instead of trying to transform your way of thinking completely, try to adopt a mentality of “managing” your decision-making biases. This means making decisions more intentionally and slowly, and trying to be aware of times when you notice decision-making biases slipping in.
On teams you have the benefit of having other people around as well, who are there ostensibly to help and support you. So use your team to help each other notice and move away from each others’ biases, and try to reshape your team environment so that it is more supportive and thoughtful in its decision-making.
Additionally, here are a few tactics and strategies that your team can adopt to manage decision-making biases:
1. Take it slow
Some decisions need to be made quickly, yes. But trying to make decisions more slowly and not plunging in can help your team avoid falling into decision-making biases, which have been developed to deal with issues simply and easily.
2. Try to avoid framing a decision from the beginning
We tend to want to frame issues from the start: us against them, right versus wrong, the right way against the wrong way. Try avoiding this and looking at issues as neutral as possible. Or, try using multiple frames for decisions, so that you allow your mind to be as open to new ideas as possible.
3. Be humble
As you may have noticed, a lot of the decision-making biases on our list occur when we get too confident about ourselves or our judgment. Staying humble is a good way to counteract this, and avoid thinking too positively or too optimistically. It will also help keep your judgment grounded in the real world, instead of based on some imagined ideal of yourself, your team, or reality.
4. Don’t look for shortcuts
Decisions are sometimes hard and require a lot of time and patience. Looking for shortcuts will curtail any ability to think realistically about certain decisions. After all, shortcuts are how we developed cognitive biases in the first place.
5. Trust in your team’s decision-making process
We talked last time about the decision-making process. Good decision-making processes help your team stay on task and allow decisions to take place in an open, supportive and trusting environment, which will help your team avoid falling into cognitive-bias traps.
6. Listen to feedback and criticism
Real, honest feedback and criticism can help point out decision-making biases, both individually and for teams a whole. Feedback is therefore critical in helping you become more aware of the biases that hinder your team’s development. Be sure to hear from as many voices on your team as possible too, so that you can learn from different perspectives.
7. Be willing to change and grow
Many decision-making biases are also due to our embrace of the status quo. We often don’t want to change how we do things, because it’s scary or difficult, and so we develop cognitive biases to justify how we think and act. To avoid these biases then, you need to accept change and growth and be willing to work towards them as goals. You don’t need to change overnight, but working towards changing how you think is one step towards limiting the effects that decision-making biases have on your teams productivity.