A cognitive bias is a pattern of deviation in judgment that occurs in particular situations and can lead to perceptual distortion, inaccurate judgment, illogical interpretation, or what is broadly called irrationality. Implicit in the concept of a pattern of deviation is a standard of comparison with what is normative or expected; this may be the judgment of people outside those particular situations, or a set of independently verifiable facts. Essentially, there must be an objective observer to identify cognitive bias in a subjective individual.
In this optical illusion all lines are actually parallel. Perceptual distortion makes them seem crooked.
Bias arises from various processes that can be difficult to distinguish. Bias is not inherently good or bad--it is pointedly subjective or contrary to reactions or decisions that one might objectively expect. Ways in which biases are derived include:
- Information-processing shortcuts (heuristics)
- Mental noise
- The mind's limited information processing capacity
- Emotional and moral motivations
- Social influence
The notion of cognitive biases was introduced by Amos Tversky and Daniel Kahneman in 1972 and grew out of their experience of people's innumeracy, or inability to reason intuitively with greater orders of magnitude. They and their colleagues demonstrated several replicable ways in which human judgments and decisions differ from rational choice theory. They explained these differences in terms of heuristics, rules which are simple for the brain to compute but which introduce systematic errors.
Perceptual Distortions and Management
The ways in which we distort our perception are particularly relevant for managers because they make many decisions, and deal with many people making assessments an judgments, on a daily basis. Managers must be aware of their own logical and perceptive fallacies and the biases of others. This requires a great deal of organizational behavior knowledge. A few useful perceptual distortions managers should be aware of include:
- Confirmation bias - Simply put, humans have a strong tendency to manipulate new information and facts until they match their own preconceived notions. This inappropriate confirmation allows for poor decision-making that ignores the true implications of new data.
- Self-serving bias - Another common bias is the tendency to take credit for success while passing the buck on failure. Managers must monitor this in employees and realize when they are guilty themselves. Being objective about success and failure enables growth and ensures proper accountability.
- Belief bias - Individuals often make a decision before they have all the facts. In this situation, they believe that their confidence in their decision is founded on a rational and logical assessment of the facts when it is not.
- Framing - It is quite easy to be right about everything if you carefully select the context and perspective on a given issue. Framing enables people to ignore relevant facts by narrowing down what is considered applicable to a given decision.
- Causality - Humans are pattern-matching organisms. People analyze past events to predict future outcomes. Sometimes their analysis is accurate, but sometimes it is not. It is easy to see the cause-effect relationship in completely random situations. Statistical confidence intervals are useful in mitigating this perceptive distortion.