I want to point to Belsky's article on why we think we are better decision makers under uncertainty than we really are. He summarizes several common errors:
The sunk cost fallacy - hanging on to a decision, or an investment, in an unconscious desire to justify it.
Loss aversion - reacting more strongly to loss of a resource (time, goods, or money) than to a similar gain.
Overconfidence - overrating our abilities, knowledge, and skill (two thirds of investors rate their financial sophistication as advanced, but barely pass a financial literacy exam.)
Optimism bias - which seems to be hard-wired into our brains because it has evolutionarily useful, driving humans to strive in the face of long odds.
Hindsight bias - rewriting history to make ourselves look good, as in misremembering our forecasts in a way that makes us look smarter.
Attribution bias - attributing good outcomes to our own skills, but bad outcomes to causes over which we had no control.
Confirmation bias - giving too much weight to information that supports our existing beliefs and discounting that which does not.
The last certainly needs to be read in the light of Dan Sperber and Hugo Mercier's Argumentative Hypothesis in which confirmation is a feature of reasoning, not a bug.
ReplyDeleteMercier, Hugo & Sperber, Dan. 'Why Do Humans Reason. Arguments for an Argumentative Theory.' Behavioral and Brain Sciences. (2011) 34: 57 – 111. doi:10.1017/S0140525X10000968.
Thanks for the pointer.
ReplyDeleteHere is that abstract:
Reasoning is generally seen as a means to improve knowledge and make better decisions. However, much evidence shows that reasoning often leads to epistemic distortions and poor decisions. This suggests that the function of reasoning should be rethought. Our hypothesis is that the function of reasoning is argumentative. It is to devise and evaluate arguments intended to persuade. Reasoning so conceived is adaptive given the exceptional dependence of humans on communication and their vulnerability to misinformation. A wide range of evidence in the psychology of reasoning and decision making can be reinterpreted and better explained in the light of this hypothesis. Poor performance in standard reasoning tasks is explained by the lack of argumentative context. When the same problems are placed in a proper argumentative setting, people turn out to be skilled arguers. Skilled arguers, however, are not after the truth but after arguments supporting their views. This explains the notorious confirmation bias. This bias is apparent not only when people are actually arguing, but also when they are reasoning proactively from the perspective of having to defend their opinions. Reasoning so motivated can distort evaluations and attitudes and allow erroneous beliefs to persist. Proactively used reasoning also favors decisions that are easy to justify but not necessarily better. In all these instances traditionally described as failures or flaws, reasoning does exactly what can be expected of an argumentative device: Look for arguments that support a given conclusion, and, ceteris paribus, favor conclusions for which arguments can be found.