6 common mistakes that prevent you from making good decisions

Just because you think it's a good option doesn't mean it is.

Aug 24, 2024

🏷️ Categories: Decision making and biases

Life is not a one-way street; deciding which path to take is crucial.

I used to believe that I was a rational person and that I made objective decisions. I erased that idea from my head as soon as I studied psychology. In reality, neither I, nor you, nor anyone else is rational. We are subjective observers of reality and our way of reasoning leads us to erroneous deductions and to overvaluing or undervaluing options.

There are many biases, heuristics and other concepts that psychologists use to describe these mental processes, but I don't want to overwhelm you with so much detail.

Today I will bring you the 6 most common mistakes that divert you from making good decisions.

1. Confirmation bias

This is the titan of biases.

Confirmation bias is our tendency to seek out and favour information that confirms our current beliefs, while ignoring or minimising information that contradicts them.

Imagine two people, A and B, with opposing beliefs about vaccination. Person A is convinced that vaccines are crucial to health and seeks out studies and testimonials to support their efficacy. Person B, on the other hand, is concerned about possible side effects and dives into sources that only talk about the dangers of vaccination. Thus, he or she reinforces his or her fear, ignoring the overwhelming scientific evidence that supports its high safety and efficacy.

Both individuals, by selecting information that aligns with their beliefs, end up reinforcing their beliefs, turning them into immovable truths.

The more integrated the belief is into your identity, the harder it is to change.

First we form the belief, then we look for information that makes us right.

2. Sunk cost bias

It happens in contexts where you have invested time, money or other resources and you make decisions based on what you have already invested and not on alternative benefits.

Let's say you have spent three years studying for a university degree. Suddenly, you realise that it's not for you. What do you do? The logical thing to do would be to change course, but sometimes we keep going because we have already invested time and money even though we don't see a future for that investment. The greater the investment, the more you will overvalue continuing just in the hope of making the most of what you have invested.

This happens a lot in reading. You start a book that you don't like at the end, but you continue it just because you have already read part of it and you don't want to leave it halfway through.

Are you one of those people?

3. Anchorage bias

We tend to anchor ourselves to the first information we receive. This initial anchor serves as a reference, and all subsequent information is interpreted according to our anchor.

Imagine you go into an electronics shop to buy a pair of headphones. The first thing you see is a high-tech model that costs €300. Then you see an €80 model. Although €80 might seem like a high price if you had seen it at first, after seeing the €300 model, an €80 model seems like a bargain. The €300 price acts as an anchor in your mind, making everything else seem cheaper in comparison.

Another typical example is when you are told that something will take three weeks and then it takes six. In that case we feel great frustration, but if you had been told from the start that it would take six weeks, your perception would be much more tolerant.

Anchoring affects our perception of value, time and effort.

4. Availability heuristics

We give more importance to information that is more easily remembered.

The clearest example is the media. If every time a plane crashes it is in the news, we will think that they are dangerous. People are afraid of flying in a plane but not of driving a car, even though it is much more dangerous.

If you are looking for a flat and your friend says that he didn't find one, you will think that the situation is difficult, even though your friend may be an isolated case.

Just because you remember or see something often does not mean that this is the reality.

5. Loss aversion

The pain of losing is greater than the pleasure of gaining something of equal value.

Imagine you have a subscription to a newsletter that you barely read. Even though you don't use it, the thought of cancelling it and ‘losing’ that connection makes you uncomfortable. You could invest the money in something more useful to you, but the aversion to loss makes you keep the subscription for fear of losing what you have.

There is a Spanish proverb that I hate: ‘better the bad you know than the good you could know’.

6. Survivor bias

We remember the success stories and ignore the number of failures.

It is typical when we only analyse the winners and try to copy their strategies, without realising that many other people did the same and failed. It happens because the success stories are very loud, but the failures are hidden.

This bias is very common in the business, artistic and sporting world.

We hear stories of sportsmen, artists or entrepreneurs who pursued their dreams despite the odds and worked very hard, which leads us to think that anyone with enough passion and dedication can achieve the same. However, we forget the thousands of artists, entrepreneurs and sportsmen and women who also pursued their dreams with the same passion and did not succeed.

It's like an iceberg. You only know the top of a whole invisible reality.

✍️ Your turn: Did you know about these mental processes? How have they affected you?
💭 Quote of the day: ‘Just because you don't understand something doesn't mean it doesn't make sense’. A Series of Unfortunate Events #10: The Slippery Slope, Lemony Snicket.

Thank you for being by my side one more day ♥️.