This blog post is inspired from the book “Thinking Fast and Slow” authored by Daniel Kahneman. Kahneman challenged the rational model of judgment and decision making. This book is an enthralling journey inside the brain’s two operating systems that drive judgment and decision making. Kahneman named these two systems simply System 1 and System 2. System 1 acts as a fast process, where intuition and emotion play significant roles, System 2 is slower and enforces more deliberation and logical decision making process. Our personal mood at the decision time  plays its own role in our decisions. A good mood brings a state of cognitive ease, bringing more trust in our intuition. On the other hand, in a strained time we like to be more vigilant and suspicious. We invest more time and effort to avoid errors using System 2 instead of relying on intuition and creativity. In Thinking Fast and Slow, Kahneman describes how System 1 and System 2 play a role in our decision biases, develop overconfidence at times, and influence the choices we make. Here I like to discuss lessons regarding biases and leave the discussion about overconfidence and choices pitfalls for another future post.

Everyday we make decisions, whether it is personal or in a position as a leader, we like to be rational and fair from our perspective. In reality we have biases, at times decisions likely to incline in one particular direction because of the prejudice or prior information. A good example, if you have a small data sample that is confirming your prejudice; it is very likely that you will fall into the confirmation bias without realizing that the small data samples can’t be used as representative of complete information distribution curve. It has a high probability to represent the tail end of the normal distribution curve. 

Anchoring is another factor that plays a role in our biases. Once you are initially anchored at a particular level in evaluating a cost, timeline, or quality, System 1 has a potential to take over the decision making process and apply the adjustments over the anchored value instead of doing fair evaluation. You can see the use of anchoring as a widely used technique to prime the negotiation process. There are places where it is a powerful tool to fast track to set the expectation of your audience or it can be abused to play the bias game to influence someone’s decision. Anyone who has shopping experience in India or China knows how everyday vendors use anchoring as a tool to influence the shopper’s price evaluation decision.

Availability and freshness of information can trigger a self-sustaining vicious cycle of bias and amplifier effect. You can see this in a viral message shared on a social media network or a media story published in several newspapers that catches attention to a particular segment of the public. The emotional reaction from that segment itself becomes news and triggers greater concerns and involvement. 

Avoiding biases due to prejudice is hard, because our thought process is associative and metaphoric. Our System 1 favors cognitive ease, it likes to make fast and intuitive decisions by developing causal relationships from the prior information even when those relationships don’t exist. Statistical thought processes require thinking about many things at once, analytical and logical processing that require deliberation and is a slower process, the job of System 2.