Decision Making and Cognitive Biases

How heuristics shape our judgments and why rationality is elusive.

Every day, we make countless decisions, from what to eat for breakfast to which career to pursue. While we like to think of ourselves as rational beings, psychological research shows that our judgments are systematically biased. Understanding these biases and the heuristics that give rise to them can help us make better choices and appreciate the quirks of human cognition.

Heuristics: Mental Shortcuts

Heuristics are simple rules or strategies we use to make decisions quickly. They are generally useful because they allow us to function in a complex world without being paralysed by analysis. However, heuristics can lead to predictable errors. Daniel Kahneman and Amos Tversky identified several key heuristics in their pioneering work on judgment under uncertainty.

Availability Heuristic

When estimating the likelihood of an event, we often rely on how easily examples come to mind. For instance, after seeing news reports about plane crashes, people may overestimate the danger of flying. The availability heuristic leads us to overweight recent or vivid experiences, even if they are rare.

Representativeness Heuristic

We tend to judge the probability that something belongs to a category based on how similar it is to our prototype of that category. For example, if told about a quiet person who loves books, we might assume they are a librarian rather than a salesperson, even if salespeople vastly outnumber librarians. This heuristic can cause us to neglect base rates and fall for the conjunction fallacy.

Anchoring and Adjustment

When making numerical estimates, we often start from an initial anchor and then adjust. Anchors can be arbitrary or provided by others. In one experiment, participants spun a wheel rigged to land on 10 or 65 and then estimated the percentage of African countries in the UN. Those who saw 65 gave much higher estimates than those who saw 10. Anchoring affects negotiations, pricing and even legal judgments.

Common Cognitive Biases

Cognitive biases are systematic patterns of deviation from rationality. They arise from heuristics, emotional influences and limitations of attention and memory. Here are a few notable biases:

Why Biases Persist

Cognitive biases persist because they are rooted in fundamental aspects of human cognition. Our brains evolved to make fast decisions in uncertain environments. While heuristics can lead us astray, they often produce satisfactory results with minimal cognitive effort. Moreover, emotions, social influences and limited feedback can reinforce biased thinking.

Debiasing Strategies

Although eliminating biases entirely is unrealistic, we can mitigate their impact:

Understanding cognitive biases not only helps individuals make better choices but also informs public policy, legal systems and economic models. Behavioural economics incorporates these psychological insights to explain market anomalies and design interventions that nudge people toward healthier and more rational behaviours.

Next time you find yourself making a quick judgment, pause to consider whether a heuristic might be at work. Embracing the quirks of the human mind can lead to wiser decisions and greater empathy for others’ choices.