The 25 Cognitive Biases

Uncovering The Myth of Rational Thinking

By Charles Holm

Copyright 2015 by Charles Holm

All rights reserved in all media. No part of this book may be used or reproduced without written
permission, except in the case of brief quotations embodied in critical articles and reviews.

Table of Contents
Preface
Chapter 1: Projection Bias
Chapter 2: Hyperbolic Discounting
Chapter 3: Fundamental Attribution Error or Correspondence Bias
Chapter 4: Curse of Knowledge
Chapter 5: Dunning-Kruger Effect
Chapter 6: Framing Effect
Chapter 7: Hindsight Bias
Chapter 8: Identifiable Victim Effect
Chapter 9: Sunk Cost Fallacy or Irrational Escalation
Chapter 10: Loss Aversion
Chapter 11: Outcome Bias
Chapter 12: Overconfidence Effect
Chapter 13: Risk Compensation or Peltzman Effect
Chapter 14: Halo Effect
Chapter 15: Illusion of Asymmetric Insight
Chapter 16: Self-Serving Bias
Chapter 17: Illusion of Truth Effect or The Truth Effect
Chapter 18: Spotlight Effect
Chapter 19: Survivorship Bias
Chapter 20: Availability Bias
Chapter 21: The Swimmers Body Illusion
Chapter 22: Negativity Bias

Chapter 23: Anchoring Effect

Chapter 24: Confirmation Bias
Chapter 25: Bias Blind Spot
Conclusion

Preface
We humans applaud our ability to be rational, objective thinkers. In reality this is not the case at all.
We all have the tendency to overestimate our rationality to the point of denying reality. The many
ways in which we do this are collectively called cognitive biases. Our brain may be the most
complicated thinking machine but it is not without limitations. In our attempt to understand the world
around us through our lens we simplify things and fall prey to cognitive biases. Sometimes these
biases are caused by heuristics or mental shortcuts which help us reach quick judgments when we
have little time. At other times our judgment is clouded by situational factors and inner motivations
and emotions.
However we are not completely helpless in this aspect. Knowing these biases exist can help us avoid
them through conscious efforts. We need to be able to recognize these biases in our decision making.
They are inevitable in most cases but they are not impossible to bypass.

Chapter 1: Projection Bias

You are all invited to a fun get together at my house where we will watch popular Japanese
anime, eat caramel popcorn, paint each others faces and play hide and seek in the yard
The host of this party has mistakenly assumed everyone else shares their definition of fun. This
tendency to confidently assume that others share our thinking pattern, attitudes and beliefs is known as
the projection bias. A related effect known as the false-consensus bias takes this tendency a step
further making us believe others agree with our views as well . We hold on to these assumptions
despite knowing it is impossible for everyone to use the same mental framework that we do.
However, the projective bias is not limited to the views of other people but also includes incorrect
predictions about our own views at any point in the future. Our decisions for the future are majorly
based on the assumption that our current preferences will stay the same regardless of time. A man
who is very hungry will end up buying more food than what he would normally eat assuming his
future self will be just as hungry as he is in that moment.
The main problem underlying projection bias is not being able to understand that you are different
from others. Hence a way of avoiding this is to give some time, before making quick judgments, to
think about how others perception can be different from yours. A simple way to find this out can be to
ask their opinions beforehand.

Chapter 2: Hyperbolic Discounting

Would you prefer to get $5 right now or $10 in two weeks? If your immediate answer is $5 you just
engaged in yet another bias known as hyperbolic discounting. This refers to our tendency to choose a
smaller reward given sooner over a delayed larger reward. We tend to place a higher value on
temporal proximity (nearness of the event to the present) rather than the actual reward because we
want to avoid waiting. You might have also considered the alternate to be a rational choice. But then
again, cognitive biases go against all common sense.
Why is it called hyperbolic? The tendency to fall prey to this bias decreases as time for both
rewards gets further away from the present. So you may prefer to get $100 in 5 years than 50$ in 4
years. You may think if you have to wait that much anyway why not wait another year and get double
the amount. The reason this thinking is considered irrational is because we are viewing the same
problem differently simply based on the temporal proximity. People in the marketing business are
well aware of this bias and increase their sales by offering a smaller reward sooner in place of a
bigger reward later.

Chapter 3: Fundamental Attribution Error or Correspondence Bias

A man bumps in to you and walks away without an apology. What are the immediate thoughts
running in your head at that moment about that stranger? You are most definitely summing up a list
of all the bad qualities he must obviously posses. The truth may very well be the complete opposite.
Maybe he is just too distracted by something important and never intended to be rude. This is what
we call the fundamental attribution error. In face of such events we immediately jump to the
conclusion that a persons behavior in that particular moment is not an isolated event but represents
his or her permanent traits. We automatically tend to disregard the possibility of environmental and
social influences while making quick judgments. This primarily happens because our entire focus is
on the person. In order to understand what happened, we pick up and interpret that persons
behavioral cues as a reflection of his personality and completely ignore any obvious situational cues.
A way to avoid falling prey to this bias is to put yourself in that persons shoes and think of all the
possible events that could make you act the same way. This will help you realize that we dont
always act ourselves in certain situations.

Chapter 4: Curse of Knowledge

I am having trouble breathing, Sam complained to his doctor
The posterior wall of your nasopharynx is inflamed, with hyperemia and acute follicular
tonsillitis, the doctor assured him after a thorough examination
I am going to die? Sam asked white as a sheet.
No..NoI meant you have a sore throat!

Knowledge is power they say but it can become a curse as well. Too much knowledge about anything
hinders our ability to understand things from the perspective of other less informed people. When
faced with a situation where we are questioned about an area of our expertise we always tend to use
jargons and technical terms without realizing the high possibility that the other person may not be
aware of them. What we once had to learn ourselves becomes common knowledge leading to
incorrect assumptions about how much other people understand.

This can be avoided through conscious practice. No matter how much of an expert you are in any area
always remind yourself how you were once less informed too. Start off with the basic stuff first to get
an idea of what level of understanding your audience stands at. Once you have done that, only then
move on to technicalities.

Chapter 5: Dunning-Kruger Effect

Amy confidently walks in to audition for a local singing competition.
You seem confident. Do you think you have what it takes to win this competition?
I am 110% confident you will love my singing. Amy replied with a broad smile.
She began singing in her high-pitched voice as the judges stared at her, horrified.

Have you ever come across people that you know are less competent yet they confidently claim to be
otherwise? This is in fact another cognitive bias called the Dunning-Kruger effect. We tend to deny
our failures more than we realize. We fail to acknowledge the gap that exists between our actual
performance and how we perceived our performance. People who are susceptible to this bias lack
the capacity to analyze their own performance. Hence, they end up believing they are much more
competent than they actually are. In order to make sure we dont become a victim of this bias we must
always accept feedback from others and learn from our mistakes.
On the flip side, highly competent people may appear to be humble and rate their competence lower
than it actually is. This is known as the imposter syndrome. Overachievers tend to believe that tasks
that are easy for them have to be easy for others as well. This is why they end up downplaying their
competence as compared to others.

Chapter 6: Framing Effect

In a study by Levin and Gaeth (1988) participants enjoyed eating beef which was described as
75% lean as compared to when it was described as having 25% fat.
This cognitive bias refers to our tendency to reach different conclusions from the same information
depending on how that information is presented to us. The mere framing of a question influences the
answer we provide. Studies have shown people preferring an option that is coupled with a perceived
positive outcome as compared to the corresponding negative outcome. So if an economic policy
focuses on the employment rate rather than the associated unemployment rate, people are more likely
support it. Advertisers warn customers to avoid something by highlighting its negative effects such as
anti-smoking campaigns while they focus on only the positive aspect when they want the customers to
develop a positive image about a product. Other times they manipulate the same statistics to provide
different messages. A product which claims to have 90% efficiency can be advertised by an opponent
as having a 10% chance of failing.
Framing effect can be avoided by carefully thinking through all the possible positive and negative
outcomes before reaching a final decision.

Chapter 7: Hindsight Bias

I just got the car painted. I knew this was going to happen! This is what Mike said when he
walked up to his car and noticed scratch marks on the door.
Hindsight bias is also called the knew-it-all-along effect or creeping determinism. This occurs
when people believe they predicted the outcome of a recent event, despite having no objective proof
to support this claim. Only after the event has occurred do people claim this was likely to happen.
This stands true for both positive and negative outcomes. Our dire need to make sense of the world
around us makes us susceptible to this bias. Knowing we can predict what happens to us helps us feel
safe in an unpredictable world. Research also focuses on how we recall selective information related
to the outcome of an event to convince ourselves what happened was supposed to happen.
There are two situations where the hindsight bias is more likely effect our thought process:
1. The impression of inevitability: When events are such that their cause can be easily recognized.
Example you were mugged because you were walking alone.
2. The impression of foreseeability: When the outcome of an event does not surprise you. Example
your favorite football team lost because their key player was injured.
Even though we think being able to predict outcomes provides us comfort, the hindsight bias has its
drawbacks as well. It stops us from learning from new experiences and makes us overconfident in our
supposed ability to make predictions. This is why people may end up taking huge risks that may be
harmful later on.
A way to make people realize their prediction abilities may not be true is to question them about why
the alternatives did not happen and encourage them to justify their claims. The goal is to make them
realize the high chance of things turning out differently than they think.

Chapter 8: Identifiable Victim Effect

In 2012, a 68 year old bus monitor from New York received a total of $700,000, from donors
belonging to 84 countries after a video of her being harshly bullied by four middle school students
went viral on the internet.
"A single death is a tragedy; a million deaths is a statistic." Unknown
This bias occurs when individuals are more emotionally affected by troubles and hardships of a
single identifiable victim than a larger anonymous group facing the same or greater problems. This
is why people are more willing to provide aid to an individual after hearing their personal story.
Research has shown simply getting to know statistics about any event activates the prefrontal cortex
which has no connection to emotions while hearing about the plight of one victim activates the part of
the brain responsible for emotions, the limbic system. We are also more likely to get satisfaction from
helping one individual because it is very much possible as compared to helping a million people at
the same time. Even on a general note, stories have the power to captivate us while statistics are
known to bore us.
The identifiable victim effect is irrational because we are reacting differently to a tragedy not based
on its actual level but its ability to evoke strong emotions in us. This bias gives power to the plight of
one individual to eclipse the plight of millions.

Chapter 9: Sunk Cost Fallacy or Irrational Escalation

Mark bought a $10 movie ticket a week ago. Despite being sick and wanting to rest he decides to
go anyway because he believes he would be wasting the money he paid for the ticket.
The concept of sunk costs in economics refers to already paid costs that cannot be recovered. The
sunk cost fallacy refers to our tendency to make decisions based on past investments (time, money
etc.) People will generally continue with a course of action to justify the investment they have already
made despite knowing it will probably cost them even more. The better option of abandoning the
previous investment is ignored. In the example above Mark has fallen prey to sunk cost fallacy by
thinking going to the movies even if he is sick helps him save the cost for the ticket. In reality though
the ticket has already been paid for and the money will not come back. He is only making his sickness
worse by not resting instead.
In order to avoid making irrational decisions in the future simply making yourself aware of sunk cost
fallacy can help. You could take some time out to make a list of all the possible pros and cons of
continuing with a course of action. If negative outcomes outweigh the positive ones it is better for you
to let go of your past investment and move on.

Chapter 10: Loss Aversion

Harry has the choice to invest his savings of $1,000 into two different investments. The first one
promises a possible return of $2,000 after one year but has a 40% risk of complete loss of the
investment. The second option guarantees a profit of 15% after 1 year. Why does Harry chose
Option 2, although the average profit for option 1 would be 20% and therefore higher than option
1?
Loss aversion refers to our tendency to give more weight to avoiding losses than receiving gains
when making a decision. According to research the psychological value of loss is twice as more as
gain. So even if the monetary value of the loss and gain is the same we are more likely to give more
importance to loss. In other words people feel more negatively about the pain that accompanies loss
than they feel positively about the pleasure associated with gain. As a result people end up taking
more risks to avoid losing even if it means they would potentially be in a worse position than before.
They key to avoiding this bias is to think long-term. Surely it may seem important to try to avoid loss
in that very moment. But try to look at the bigger picture and the consequences that may follow. Quick
decisions are bad decisions.

Chapter 11: Outcome Bias

In a study by Baron & Hershey (1988), participants were given a hypothetical scenario about a
surgeon deciding to carry out a risky operation. The surgeon was shown to be well aware of the
success rate. Participants were then told either the patient had died or lived. The surgeons
decision to operate was considered a mistake when the patient had died and the right choice when
the patient had lived.
As the name suggests, this bias refers to our tendency to assess the quality of a decision based entirely
on the knowledge of its outcome. Hence, a decision which leads to a positive outcome will be
viewed positively. Likewise, a decision which leads to a negative outcome will be viewed
negatively. Events that lead to the decision and other important factors are ignored and our entire
focus becomes the outcome. This is irrational thinking because outcome is just one part of the big
picture. This bias is stronger for outcomes that are negative and largely based on chance.
Outcome bias actually becomes a hindrance in our learning experience. There can be a lot of factors
responsible for a particular outcome yet we choose to overlook them. How else will we learn to
make better decisions? A way to avoid this bias is to understand the process that went on in making
and execution of that decision. Try to focus on the conditions that lead to that decision. Regardless of
the outcome one must critically analyze their decisions from an objective point of view to make sure
mistakes are avoided in the future.

Chapter 12: Overconfidence Effect

I have the address. Do you have the GPS navigator? Sally asks Jarred before they leave to the
housewarming party of their friends. What for?, I know every street in the city and don't need a
GPS. Two hours later Jarred and Sally arrive at the party which would have been a one hour
drive, if they wouldn't have lost their way three times.

This cognitive bias describes our tendency to be overly confident in our judgments which in reality
are not objectively accurate. In simpler words overconfidence effect is the difference between what
people actually know and what they think they know. Surprisingly people who are experts are more
likely victims as they refuse to accept limits to their knowledge. Research has shown high levels of
confidence to be associated with high levels of overconfidence.
The overconfidence effect can be avoided by thinking about how you received the information that is
the basis of your judgment. If it turns out your information was gathered from unreliable sources and
lack objectivity it is time to re-evaluate your judgment and consider seeking better sources.

Chapter 13: Risk Compensation or Peltzman Effect

Can you please drive a little slower?
I installed new seat belts and airbags last week. You dont have to worry about anything!

The risk compensation bias comes from our tendency to adjust our behavior based on the level of
perceived risk. We tend to take more risks when we feel protected and safe. This theory came to light
after it was observed that road safety interventions were in fact having an opposite effect. The term
Peltzman effect is named after Sam Peltzmans classic study (1975) which reported that people
believe they can afford to be reckless when they are following automobile safety laws. The risk
compensation bias is also observed in contact sports like rugby and ice hockey. New rules for player
action had to be implemented only after it was observed that players acted more violently with each
other when they had their protective equipment on.
From a more psychological point of view, Gerald J S Wilde explains this behavior through his theory
of risk homeostasis. According to this theory risk is an inherent part of our nature. We all have a
target level of risk which determines our behavior. If the perceived risk in a situation is higher than
this level we act to reduce it and if it is lower we engage in dangerous activities to get back to our
target level.
A way to avoid falling prey to this bias is to check your behavior in risky situations. If you realize
you are taking more risks because you feel safe you need to modify your behavior because there is a
chance your perceived sense of safety is way more than the actual safety. The world is an
unpredictable place and even complete safety does not guarantee a predictable outcome. As wise
people say: Better safe than sorry.

Chapter 14: Halo Effect

Whether you know any personal details about a good looking hero in your favorite movie or not, it
is very likely that you believe that person is smart, friendly and fun to be with in real life.
The halo effect was first introduced by psychologist Edward Thorndike. We fall prey to this bias
when we determine specific personality traits of someone by generalizing their overall impression.
Halo effect includes both negative and positive directions. Disliking a certain aspect of something
predisposes us to think negatively about every other thing related to it. Likewise liking a certain
aspect makes us view every other thing in a positive light. Research has shown that people tend to
attribute positive traits to people who are perceived as physically attractive and negative traits to
those who are not. This is why it is also called the physical attractiveness stereotype and the what
is beautiful is good principle. Isnt this very obvious in the way we judge celebrities?
Although the halo effect is a mental shortcut which helps us make decisions quickly, theres a high
chance our impressions may be false. The only way to avoid this is to ask yourself whether someone
actually has a certain quality or you are just assuming they do based on what you like about them.

Chapter 15: Illusion of Asymmetric Insight

I know you better than you know me
I know you better than you know yourself

How many times have you come across these phrases? We become a victim of this bias more often
than we think. The illusion of asymmetric insight makes us believe that our knowledge about others
not just surpasses their knowledge about us but their knowledge about themselves as well. This
happens even on a group level where an in-group believes they understand members of the out-group
better. We tend to believe our thoughts and perceptions are accurate. This illusion eclipses our ability
to look at the other person as a complex being. We start seeing ourselves as complicated and others as
simple and predictable. Any view that contradicts our thoughts and perception is seen as a deviation
from the right way.
What we are lacking here is the ability to look at things from multiple perspectives. We must
consciously evaluate our own thinking process. We cannot just assume others dont understand us or
we know them better. If others are providing logical explanations, their view point may just be right.
Being open-minded is the key here. Close-mindedness will lead us nowhere.

Chapter 16: Self-Serving Bias

I aced this test because I studied hard. I failed the last one because the teacher purposely used
trick questions to make it difficult.
This statement clearly implies that whoever said it is taking full credit for passing a test while
blaming it on the teacher for failing a previous one. This is called the self-serving bias. We have the
tendency to attribute positive events to our own internal characteristics and attribute negative events
to external forces that are out of our control. It stems from our tendency to attribute causes to any
behavior (attribution theory) in terms of personality traits or environmental influences. We engage in
this bias because we want to protect our self-concept from getting hurt. We try our level best to see
ourselves in a positive light. Hence we go to extreme lengths to justify anything that is seen as a threat
to our precious self-concept. The same bias also happens at a group-level as well.
The self-serving bias blocks our capacity to grow further because we never realize our own mistakes.
Now that you know this bias exists the next step is to prepare yourself to be open to failures. We are
bound to fail one time or the other at some point. Accepting failures and learning from them is what
helps us grow.

Chapter 17: Illusion of Truth Effect or The Truth Effect

Do you consider these treatments true?
Anti-bacterial soaps kill 99.9% germs.
Junk food is unhealthy.
You need to shampoo your hair everyday

Did you give your answer right away or did you actually do some empirical research to reach a
conclusion? In most cases the former is true. The more we are exposed to certain information the
more we are likely to believe it is the truth whether we have evidence to support it or not. Ever
wondered why advertisements are repeated over and over again? It may seem absurd that repetition
of a certain message can have such a profound effect on our judgment. But this is exactly what
psychological research has found out. In fact one of the most effective methods for persuasion is
repetition. We automatically tend to consider those statements valid which we have heard before as
compared to hearing something for the first time. This can be partly understood through the concept of
cognitive fluency. We prefer to use less effort to process information. Since a repeated message
becomes familiar and hence easier to process, we hold on to it.

We are constantly manipulated by the media and other sources of power to accept their opinions
through the Illusion of truth effect. Knowing that it exists can take you a long step ahead in recognizing
where it is being used. Before blindly following the trend, we must do our own research and be open
to other options as well.

Chapter 18: Spotlight Effect

Imagine walking down the stairs in a crowded mall and tripping at the very last step. You are red
with embarrassment as you picture a hundred pair of eyes looking at you. Or imagine walking in to
a party, flaunting your new hairstyle, expecting compliments from everyone you meet. How about I
tell you the number of people who are actually noticing you is way less than you imagine?

The spotlight effect quite literally makes us believe we are under a constant spotlight when in reality
that is not the case. We overestimate the number of people that are consciously paying attention to our
actions. Studies suggest egocentrism to be the root cause of this bias. We are so focused on our own
actions we have a hard time imagining other people are not that focused on us. Since we use our own
experiences to understand the world around us, a minor mishap that we think everybody witnessed, is
actually of little concern to them. We also tend to believe our thoughts and perceptions are objective
and accurate hence other people must be thinking the same thing. This is why we end up evaluating
other peoples cognitions through our experience and overestimate the probability of having similar
perceptions.

Remind yourself that others are just as focused on themselves as you are on yourself. Whether they
notice you or not, other peoples opinions should not define your reality or effect your actions.

Chapter 19: Survivorship Bias

You see one successful politician. What about the hundred others who never won the election?
You see one successful business man. What about the hundred others who set up a business that
didnt work?
You see one successful author. What about the hundred others who could not get their work
published?

The survivorship bias describes our tendency to extract useful information from successes while
ignoring the same from failures. We are more interested in finding out how something survived and
succeeded rather than how it failed and ended. We are inspired by real life examples of anyone
reaching new heights of success. However, we fail to acknowledge the most important lesson of
what-not-to-do while aiming for success. We are deprived of this crucial lesson because it never
makes it to the headlines and inspirational speeches. Only the success stories become our frame-ofreference. This thinking is considered irrational because what we think is some magic trick for
surviving may just be sheer luck.

Focusing only on success stories gives us unrealistic expectations of succeeding in the real world. We
must remind ourselves wherever there is a chance of success, failure may not be too far behind.
Hence learning from failure is a key to success as well. Researching about the other side of the coin
can help us avoid the survivorship bias.

Chapter 20: Availability Bias

The winner of a lottery ticket receives a lot of media attention. This gives us the idea that wins
occur more frequently while in reality they are very rare. That one isolated incident becomes
enough to convince us to buy a lottery ticket for ourselves.

The availability bias is a mental shortcut that enables us to make sense of the world on the basis of
the immediate information that comes to our mind. We tend to remember rare happenings more than
common ones. Hence, quick decisions are based on overestimation of the frequency of a few dramatic
and vivid incidents that are easier to recall. Watching the news highlighting a recent case of child
abduction will make us fear for our children. Just like an airplane crash will make us think twice
about travelling by air. However sometimes denial makes us underestimate the probability of a
negative event.

A way to avoid this bias is to research and find out the true story behind any news. Decisions should
be made on an objective basis. Facts and data will help us get to a sound decision more often than our
instincts. If we take some time out to remind ourselves of how common the alternative is, we can
escape this bias.

Chapter 21: The Swimmers Body Illusion

Does swimming give swimmers an athletic body or are they born with a physique that naturally
facilitates swimming?
Are the top rated universities actually the best or do they handpick the most brilliant students?
Does makeup actually make models look attractive or were they born with attractive feature?

The swimmers body illusion refers to our tendency to confuse selection factors with results. We
believe following a strict diet and exercise regimen of a swimmer can help us get the physique of a
swimmer. In reality though, swimmers are born with certain physical characteristics such as
elongated arms that naturally becomes a factor of selection in the swimming world. This bias is
frequently used by advertisers to sell their products. They make us believe we can achieve similar
results by making us identify with an already gifted model. This illusion tricks us into thinking a
particular product will get us the results we saw in the advertisement.

Having realistic expectations can help us see past this illusion. All of us are born with unique
abilities. Perhaps we should strive to use them in the best possible way instead of wasting our time
on achieving the impossible

Chapter 22: Negativity Bias

Your teacher just told you You are an exceptionally good student but you can never be the same at
sports
Are you focusing on the praise or the insult?

The negativity bias refers to our tendency to give more importance to negative events as compared to
positives ones of the same intensity. Any such isolated event has the power to wash away any
pleasurable experience. We let negativity have a profound effect on our lives. According to
neuropsychologist Rick Henson, the part of our brain responsible for emotions, immediately responds
to bad news and saves it in our long term memory. Evolutionary psychology says this is a part of our
innate fight-or-flight response which helped our ancestors survive in the wild. Research has also
shown evidence about the innate nature of this bias. Adults and even babies, as young as six months
old, take lesser time to recognize an angry face than a happy one. We also give more credibility to
negative information

Negative events do hold immense power over our emotions. Regardless of that we need to train
ourselves to be mindful about the positive events as well. This will help in focusing on the positive
event making it a permanent part of our long term memory. These moments can then be recalled with
ease whenever something negative happens to balance the negativity.

Chapter 23: Anchoring Effect

This $50 shirt is too expensive for me

We have this piece on sale. You can get it for 25% off
That sounds like a good deal. I will buy it.

We have a tendency to rely heavily on the first information we receive. Any decisions or evaluations
that we make are influenced by this anchor which becomes our reference point. We tend to adjust
our decisions from this reference point only. The reason we have difficulty predicting our future
emotions is because our reference point is our current emotional state. Hence the first impression or
perception that we make of anything stays with us no matter how much we claim to have analyzed all
possible factors in making a decision. The anchoring effect greatly influences the amount we pay for
products. In the example above the person has bought a $50 shirt only after they were told they can get
it for $37.5. When they used the set price as a reference point, the deal actually does look pretty good.
They get to save $12.5. Except that the same shirt is available for $30 at another shop. Since we are
unaware, we walk away happy from a situation like this believing we paid far less than the original
amount (reference point). However, the effect of anchoring bias is not only limited to money. A
person, who knows branded shirts are of good quality, will only use that as their buying criteria while
not actually checking the actual quality.

The anchoring bias is used far more often than we realize and is difficult to avoid. We need to be able
to get out of this mindset. A way to do this is to make a habit of comparing things. Whether its your
emotions, prices or characteristics, just sticking to one will end up biasing your evaluation capability.
We must always be open to alternative options. You could also try to avoid making quick decisions
without thinking them through.

Chapter 24: Confirmation Bias

The human understanding when it has once adopted an opinion (either as being the received
opinion or as being agreeable to itself) draws all things else to support and agree with it.
Francis Bacon

Confirmation bias describes our tendency to search for and interpret tings in a way that confirms our
own long-held beliefs. Interestingly we may even feel like we are using a rational approach but in
reality we are only testing and confirming what we already believe to be true. We tend to favor any
information that complements our point of view and reject alternatives. We make an effort to look for
such evidence and give great importance to it. It greatly effects how people collect, analyze and recall
information. Our thinking automatically becomes selective. At one point, we become excessively
adamant on our view because we have collected a lot supporting evidence over time. We even
surround ourselves with people who agree with our views.

We must make an effort to challenge our own thoughts from time to time. Try using an unbiased source
of information and understand how others differ in their opinions. Being part of a diverse group that
can challenge your notions can help tremendously.

Chapter 25: Bias Blind Spot

A famous politician was interviewed about his views on an important issue.
All my opinions are based on facts. I never make decisions without considering all the possible
aspects. People who are opposing me do not have their facts straight. Their arguments simply lack
rationality.

Research has proven we all have a bias blind spot of varying degrees. This is our tendency to
confidently believe we are less biased than other people. This basically sums up how we reason all
the cognitive biases. We refuse to believe we use all these biases while arguing that other people
clearly do. This is because we have grown so used to seeing the world through that mind frame, it is
near impossible for us to accept that our thinking pattern is biased. We strongly believe what we
know is factual and anyone who challenges us is simply in denial of reality. We dont consider it to be
their opinion. The bias blind spot happens because it is in our nature to see ourselves in a positive
light. We cannot stand the thought of accepting that we are not as rational as we think we are. Another
reason is our tendency towards naive realism- believing our understanding of the world is objective
and reality based.
This creates a huge problem in the way of avoiding biases. Knowing we fall prey to biases from time
is time is the first step towards learning to control them.

Conclusion
We all have fallen victim to these cognitive biases, probably to all of them and more then once. Being
aware of their existence will warn you next time before you feel the temptation to jump to a
conclusion. Knowing about these common cognitive biases will also help you to understand the
decision making process of your fellow humans better. If you see, that a friend of yours is being
biased, share with him or her what you've learned, so that he or she can also make better informed
decisions in the future.
The author of this book hopes that you have enjoyed this short read and is happy to receive your
feedback, stories and ideas for future editions by email at 25cbebook@gmail.com. Thank you very
much.
Enjoy life and practice awareness!
Your Charles Holm