Confirmation Bias: The “mother of all misconceptions… tendency to interpret new information so that it becomes compatible with our existing theories and beliefs… we filter out any new information that contradicts our existing views.” We are on a weight loss diet, when we lose weight we pat ourselves on the back but when we gain, we take it as normal fluctuation, for months believing the diet is working while our weight remains constant!
Contrast Effect: Humans have difficulty with absolute judgements and hence judge something to be beautiful, expensive or good if we have something ugly, cheap or not good in front of us. All upgrade options exploit this: compared to a Rs. 15 lac price tag on a car, Rs. 30,000 leather seats sound like a pittance.
Envy: “Of all the emotions, envy is the most idiotic”. Paradoxically we envy people who are most like us. We are okay with, say, a musician earning much more than us, but not our peer in the same company as us. This leads to a practical error – as we do better, we keep going up and our peer group keeps becoming better. So just when we are done rejoicing over our success vs. our previous peer, a new set of benchmarks again make us envious!
Imagine 99 of these errors we all habitually make, with insightful analysis of how things actually go wrong in business and in life: Availability Bias (choosing based on what’s immediately available, rather than what’s right), Outcome bias (celebrating the outcome as proof of successful strategy when the effect may be environment or chance), Illusion of control, Self-selection bias, Action Bias and so on.
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This is an interesting book. It points out how we tend to think unknowingly and how it influences our decisions. It can change the way we think in matters which we think is small but can have a huge impact.
A very good book for decision making! It also explains every bias you can think of. Totally recommend.