I love to see myself as a rational person, but unfortunately, I’m not one. The real catch here is it’s not me — or you. Irrationality is common in all us.
Here are five common mental error that will sway you from making good decisions.
1. Survivorship Bias.
In everyday life, You stumble upon articles with titles like “10 Things Richest People Do Everyday” or “The Secret Behind LeBron James Training in the Off-Season” . You are seeing survivor-ship bias in action.
Survivor-ship bias recognizes our tendency to concentrate on the winners in a particular domain. We try to learn from them while completely forgetting about the losers who are employing the same strategy. This is a major mental error as it can hinder your decisions up to a great extent.
Some athletes never made it to the NBA despite having a very similar way of training to that of LeBron James. Thousands of athletes who never made it to the top are never heard of after that and no one bothers about their story. We only hear from the people who survive. The same strategies that didn’t work for most people are mistaken overvalued by our brain due to the outcomes of one survivor for whom it did pay off.
Another example: “ Mark Zuckerberg, Richard Branson, and Bill Gates” . All dropped out of school and became billionaires! You don’t need school to succeed. Entrepreneurs need to stop wasting time in class and get started.
It’s totally possible that Richard Branson would have succeeded even if he was not a drop out. Hence clearing that it is not necessary to be a drop out to succeed.
When only the survivors are remembered and the losers are forgotten of, it becomes very impractical to say if a particular strategy leads to success. Thus,By keeping this fact in mind this mental error can be corrected.
2. Loss Aversion.
Loss aversion is nothing but a simple phenomenon of preferring avoiding losses over acquiring gains. Research has shown that if someone gives you $10, you will experience a small boost in satisfaction. But if you lose $10 you will experience a higher loss of satisfaction. Yes, the responses are opposite, but they are not equal in proportion.
We live in an illusion of feeling protective of the things we own . That often leads us to overvalue these items in comparison with the options . Hence giving rise to this mental error which can exploit major decisions.
For example, when you buy a new pair of shoes it provides you with a small boost of pleasure. Yet, if you own a pair of shoes that you never wear, giving them away a few months later might be painful. You never wear them, but for some reason, you can’t stand giving them away to someone needy.
3. The Availability Heuristic.
A team at Harward University headed by Steven Pinker recently researched and observed that we are currently living in the least violent time in history.
These statistics usually shock most of the people. Some still refuse to believe them. How can it be the most peaceful time in history when so many things are going wrong? why are there so many wars going on right now? Why do I keep hearing about murder and rape and crime every single day?
Welcome to the Availability Heuristic. One of the most common mental error.
To your surprise, the reported fact is that we are not only living in the most peaceful time in history but also the best reported time in history. Whereabouts of any tragedy or crime are more easily accessible than ever before. With just a click away more information can be pulled up about the most recent terrorist attack than any newspaper
The overall chances of malicious events taking place are decreasing. But the likelihood that you’ll hear about one of them (or many of them) is increasing. So it is not like the crime rate around you is more than your ancestor’s time it’s just this mental error playing tricks on your mind.
The most common place where you can see the application of anchoring is in pricing. If the price tag you see on a watch in a store is $500, you might consider it too much for your pocket. But if you enter in a store and the first thing you see is a watch for $5,000 at the front of the display. Suddenly the $500 watch around the corner seems pretty reasonable. It might shock you but some of the premium products that a company sells are never even expected to sell many units themselves. But they serve the quite essential role of manipulating your mindset . They make mid-range products appear much cheaper than they would on their own. That is anchoring for you in layman terms and the most common mental error.
5. Confirmation Bias.
The Granddaddy of Them All. When we look for and favor only the facts that hold true to our beliefs while sidelining or devaluing facts that contradict our beliefs that are called Confirmation Bias.
For example, Person XYZ believes that the changes in climate is a serious issue. So they only search out and read stories about climate change . As a result, Person XYZ continues to confirm and support their current beliefs.
Meanwhile, Person PQR does not believe that the changes in the climate are any kind of a serious issue. They only search out and read stories that discuss how climate change is a myth? why scientists are incorrect? and how we are all being fooled? As a result, Person PQR continues to confirm and support their current beliefs.
Changing your mind is harder than it looks. The more you think you know about something. The more prone you are to filtering and ignoring all other present information to the contrary. But this mental error can be overcome with a bit of habitual practice.