Monday, November 4, 2019

Do you have any biases? 2

 03 Authority bias
Airline pilots wear smart uniforms for a reason. Not because they belong to a military order. They don’t. But because they want to imply authority. This is great for controlling passengers. They obey. The problem is, so do co-pilots. The writer Malcolm Gladwell in his book Outliers suggest the Korean Air flight 801 crashed because the co-pilot was too reticent to challenge the pilot about his decisions. Post-crash, British investigators demanded the airline “promote a freer atmosphere between the captain and the first officer” to permit questioning. The air of authority can dupe the best of us. A flash of military insignia, or sharp suit, can short-circuit our normal capacity for analysis.

04 Conservatism bias
It’s a misconception that the right approach to risk is solely to minimize it. Risk is a vital and necessary part of life. Conservatism bias is what happens when this is not well-understood Conservatism bias is why Blockbuster video turned down the acquisition of Netflix for $50 million. The management found it easier to do nothing than embrace risk.

05 Triviality law
It’s exhausting to think about complex issues. Given half a chance, the human mind will make a break for a simpler, trivial issue to distract itself. Politics is dominated by this effect. Major issues, such as a politician’s view on the national debt, are rarely discussed or reported. Too hard. Instead, the focus is on trivial issues, such as whether they can eat a bacon sandwich with dignity. This is a serious issue in risk. It takes effort to get people to think about critical issues. Given the chance they’ll veer off and focus on something fluffy and trivial, to spare their grey cells.

06 Risk compensation
The British Medical Journal recently came out against bicycle helmets. It’s not that helmets don’t work. Fall off and you’ll be grateful your fragile skull is encased in protective plastic. Rather, the phenomenon of risk compensation negates the benefit. Data from multiple nations shows that when cyclists feel safer, they compensate, by taking extra risks, cutting in front of cars and not looking at junctions. Individuals with documented helmet use had 2.2 times the odds of non–helmet users of being involved in an injury-related accident. Furthermore, mandatory helmet wearing reduced cycling, adding to negative effects.

07 Social proof
There is a beguiling power of effects such as social proof. Do you remember some years ago when one oil company bought a fertilizer company, and every other major oil company practically ran out and bought a fertilizer company? And there was no more damned reason for all these oil companies to buy fertilizer companies, but they didn’t know exactly what to do and if Exxon was doing it, it was good enough for Mobil, and vice versa. If someone in authority is doing or saying it you have a social proof and will consider whatever it is acceptable.

08 Charm pricing
Human reaction to numbers is riddled with quirks. Discount stores use charm pricing, knocking a penny off to end in “99”. When I worked in retail many years ago, we knew the value of having a price ending in 99. In an informal survey 50% of consumers when asked saw prices ending in 99 cents as more value for money, while the remainder saw prices as higher. Charm prices were 9 percent more likely to be seen as good value than the rounded prices. A disproportionately large improvement for a 1 percent price drop.

09 Overconfidence bias
There is an idea that dim people overestimate their skills, while bright people doubt their abilities. But could it be that even experts are overconfident? Alas yes, especially when forecasting. Economist Philip Tetlock spent 20 years studying forecasts by experts about the economy, stock markets, wars and other issues. He found the average expert did as well as random guessing or as he put it “as a dart-throwing chimpanzee

If you have been taken aback when you observed that someone was “assuming the worst intentions of others and have struggled to understand how someone could create in their mind such a different narrative of past events, despite seeing the same evidence. that you had seen. Hopefully, this will explain some of why people do what they d

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