You may believe that your conscious self is in control of your life, but the scientific reality is very much the opposite. Conquer these biases to turn things around.
The brain is surprisingly resource intensive, making up about 2 percent of your body weight, but consuming 20 percent of your calories. Because of this, the human brain has evolved with numerous mechanisms in place to reduce energy consumption wherever possible.
Thanks to two of those mechanisms, latent inhibition (a part of your brain’s sensory filter) and cognitive biases (decision-making shortcuts), most of what you think of as conscious decisions are being made with filtered data and a heavily biased mindset. While this is great for biological efficiency, it’s not so great for thriving in a fast-paced, modern world.
While there are literally hundreds of cognitive biases, these seven play a significant role in preventing you from achieving your full potential:
1. Confirmation Bias. This occurs when you warp data to fit or support your existing beliefs or expectations. The effects are often found in religion, politics, and even science.
Why does that matter? Because an inability to look outside of your existing belief systems will vastly limit your ability to grow and improve, both in business and in life. We need to consider more possibilities, and be more open to alternatives.
2. Loss Aversion. Also known as the endowment effect, loss aversion is a principle in behavioral economics whereby someone will work harder to keep something than they will to acquire it in the first place. This is also closely related to the sunk cost fallacy, where one is inclined to pump more resources into something based solely on the resources already expended.
If you need an example, being hesitant to fire a bad employee is a common one. You might think, “Well, I’ve already put so much time into training them, paying them, insuring them, and their performance isn’t really THAT bad…I should see if I can salvage this.”
Don’t make this mistake. When time or money is gone, it’s gone, and you need to consider the future without attachment to the past. Speaking of past and future…
3. Gambler’s Fallacy. The human brain has difficulty understanding probability and large numbers, so you are
naturally inclined to believe that past events can somehow change or impact future probabilities.
For example, there are many people who try to analyze the past performance of the stock market in order to pick future stocks that should be winners, usually with terrible results (there’s a reason why very few money managers outperform the S&P 500). This is a product of the Gambler’s Fallacy, and it can get you, your clients, and your businesses into a great deal of trouble.
How does this hold you back? In most cases, past events don’t change the future unless you let them, so you need to take great care when attempting to learn from the past. It’s fine to look to the past for insights, but don’t fall into the “past performance dictates future performance” trap.
4. Availability Cascade. Just because you hear something frequently does not make it true, though the brain sure likes to believe otherwise. For example:
- You don’t use just 10 percent of your brains (you actually use 100 percent).
- Gum doesn’t take seven years to digest (it doesn’t digest at all; it just passes right through in about the same time as everything else).
- Bats aren’t blind (they see quite well, and have amazing hearing to boot).
Surprised? Bad information seems to spread as fast, if not faster, than the truth, so you need to fact-check frequently before you make decisions based on bad information. If you notice something coming up again and again, dig into the facts and determine for yourself what is or isn’t true.