21 Mind Traps : The Ultimate Guide to your most common Thinking errors (Part II)

You probably think you are in complete control  of your decisions and thoughts…. But how often are they guided by something else? Something you  don’t even notice occurring deep within your mind… Here are 21 cognitive mind traps, fallacies, biases and other phenomenon  that exist within your brain.

Strange things that are hard  wired into all human minds. You may go through your entire life or well  into adulthood completely unaware that you are carrying around these thinking errors and mental  shortcuts that influence your day-to-day thinking. You can’t turn them off or  delete them from your brain, But being one of the few people that can  notice when they arise in your mind and knowing situations they are likely  to act upon your decision making is one of the first steps to becoming a  more thoughtful and rational thinker.

This 2 part series is mainly inspired  by the works of Nobel Prize winning psychologist Daniel Kahneman and his  amazing book “Thinking Fast and Slow”. Survivorship Bias During World War 2, Navy Researchers conducted a  study on the damage done to aircraft by enemy fire that had returned from missions, they concluded  and recommended that armor needed to be added to these areas with the most damage. At first this  seems like the most reasonable course of action, “We need to place more armor where  the planes are getting hit most” However, a mathematician by the name of Abraham Wald was quick to point out an  error the researchers had made.

They were researching data only from the  planes that had survived their missions, and the bombers that had been shot  down were not included at all. Wald proposed they change their  initial decision and do the opposite, armor the areas where the surviving planes  had not been hit as these were in fact the areas that were causing fatal damage to the  other bomber planes that had not survived. Survivorship bias is a logical error where the  data that we are presented with is representative of only a subset of the population that has  already survived some kind of filtering process.

More simply, we tend to focus on those things that  survived a process and overlook ones that failed. People may say things like “They made much  stronger and more beautiful buildings in this time and age, ignoring that this is one of  the only buildings to have survived so long, and that 99% of the buildings of that  time and age were probably flimsy and ugly but are now completely invisible to us. Here is another example.

You move to a new town. You see many  successful restaurants in the area and come to the conclusion that if all  these restaurants are successful, you could very well do the same. What is  invisible to you are all the restaurants that failed in the years prior.

When you are only  focusing on the “winners” , Survivorship bias causes you to underestimate the challenge  and overestimate your chances of success. Everywhere you look there are successful actors  and actresses. In reality your chances are a fraction above zero of becoming successful. 

But no one is interested in all the failures, so the burial ground of all the  failures is largely invisible to you. Society and Media only focuses on the winners. Try googling “Actors that never made it.

. . .

.  Or people who failed in life after dropping out of college” and you won't have  much luck finding anything useful. For every rock star, there are thousands of people  in the “cemetery of failure” who never made it” For every Startup business, there  are thousands of failed startups.

Everyone should chase their dreams,  but don’t let survivorship bias trick you into thinking the challenge is  easier than it seems. Be careful of your overly optimistic beliefs that  are caused by invisible failures. Are you only focusing on the person  or thing that survived a process?

Self-Serving Bias You received an A on the test due to  your hard work. However, you failed a test because the teacher is  unfair and doesn’t like you. For the CEO, all the great things  that happened to the company that year were a direct result of  his/her brilliant decisions.

If the company has a bad year. The economy, interest rates and government  policies are to blame. According to the self-serving bias, our  failures are due to external forces, but our successes are the  result of our internal actions.

For most people…The natural reaction to a negative outcome is to find an  excuse for it and blame others. To combat this, the first step is to simply become  aware of the bias. Try to practice humility and always seek accountability and feedback on  your strengths and weaknesses from others.

Self Serving Bias is also closely linked to… Fundamental Attribution Error We judge others’ behavior on their  personality or fundamental character, but we attribute our own  behaviors to situational factors. If Simon is late to work, it’s because  he's a lazy person and doesn’t take his job seriously. If you're late to work,  It's the traffic and weather’s fault.

Try to catch yourself in situations  where you are judging someone else on their personality in a way that you would  blame external factors in the same scenario. Hindsight Bias You have probably encountered  people who are constantly saying, "I knew that was going to happen…” “I knew that stock was going to fall…” “I knew she was going to lose the election! …” “I knew Jack and Mary were going to break up…” They are always experts  after the event has occurred.

This is hindsight Bias, otherwise  known as the “I told you so” phenomenon. When we look at past events,  everything seems clear and inevitable. Imagine you are a computer  with a virus (the hindsight bias) that causes you to write over past  information.

As a result of this virus, you are unable to reconstruct  previous states of knowledge. We think our memories are clear, but in reality  we are poor at remembering the past accurately. The hindsight bias is a memory  distorter.

Memories of what you actually said or believed before  the event are distorted to try and make your past opinions or beliefs more  inline with what actually transpired. Here is an example. This is what you actually  believed before an election… The results you observed  get updated in your brain.

The virus gets to work and now  when you go back to that memory it has been distorted. And the memory  distortion always distorts in your favor. This causes people to misremember  things they said, their past opinions, and makes people overconfident in explaining  all the reasons why something happened.

The events leading up to World  War 2 at the time, on the ground, probably looked something like this,  but after the fact, with hindsight, people put it all into a neat sequence of  events that people should have seen coming. Hindsight bias is especially harmful  to decision makers, doctors, coaches, CEO’s and financial advisors, because  onlookers don’t judge the person on the soundness of their decision making but  on whether the outcome was good or bad. We blame good decision making  that led to a bad result.

But we praise bad decision  making that led to a good result. It is easy for us to blame When we  know all the facts of what transpired we oversimplify the past, when at the time  there was doubt, uncertainty or complexity. “Don’t worry Mel, the mistake seems obvious now, but it is just hindsight.

You  could not have known in advance” “I knew this exact thing was going to happen” “Are you sure? …. I remember you  saying something quite different” Availability Bias “Cape town is safe, I know a guy who lives  there and has never had any problems with crime” “Smoking isn’t so bad, My uncle has  smoked for 50 years and he is still alive” Humans are notoriously poor  at thinking statistically, even when they are educated.

We create a picture  of the world using the examples that most easily come to mind. This is illogical, of  course, and not in line with reality. We use statements like these to try  to prove something, but they actually prove nothing at all.

When we speak like  this, we succumb to the availability bias. Plane crashes on the news are easy to recall, Safe  flights are hard to recall. The availability bias can lead us to an irrational fear of flying.

The Shark attack story on the news last week, easy to recall. Safe swims at the ocean  are hard to recall. The availability bias can lead you to have an irrational  fear of being attacked by a shark.

We estimate the likelihood  of something happening by the information most readily available in our memory. Here is all the information. And here  is the information most available to us which could be something we saw recently,  something in the news or something extreme.

Here is an example Your chances of getting attacked by a shark  in Australia are around 1 in 1,000,000. And let’s imagine this is your  perceived risk of that happening. You see a news story about a shark attack  somewhere in Australia you have never heard of.

You hear a story about a shark attack  in the same state that you live in. A friend of a cousin tells you his  uncle was attacked by a shark last week. Someone in your family was  attacked by a shark yesterday.

The closer you are in proximity to the available  information, the higher you perceive the risk. The facts and reality have remained the same, but the information most available  to us changes how we make decisions. With availability bias we go through life  with an inaccurate risk map in our heads.

We overestimate the chances of an  airplane crash, a car accident or a terrorist attack and we underestimate the  chances of dying from cancer or diabetes. Availability cascade A local news story about a razor blade found in  candy leads to mothers in the local community becoming worried, which leads to a news story  about the mothers who are worried, which leads to a national story, which leads to parents  panicking and inspecting their children’s candy, which eventually leads to homemade candy and cakes  not being given to trick or treaters nationwide. This is an availability cascade -  a self-sustaining chain of events, which may start from media reports  of a relatively minor event and lead up to mainstream public panic and/or  large-scale government intervention.

People begin to adopt the belief, not because  it’s true or prevalent, but because it’s popular. Put more simply, an availability cascade is  an enormous overreaction to a minor problem. Whenever we encounter minor risks  we either ignore them completely, or completely over exaggerate  them, with nothing in between.

A parent may know of this feeling waiting  up at night for their teenage child to come home. They know that there is a 99 percent  chance that everything is fine as usual. But having even a small thought that  something may be wrong available in your mind, sets off a self-sustaining chain  of thoughts that grows into more thoughts about something disastrous having  happened, which can eventually lead to panic and needing to immediately make  contact and make sure their child is ok.

When you are watching the news, is it an objective piece of journalism  or just an availability cascade? “This is just an availability  cascade, a nonevent that is being inflated by the media until it fills  our screens and there is public outcry. ” Sunk Cost Fallacy You go to the cinema with your friend, after  25 minutes you both realize the movie is awful.

You turn to your friend and say “This  is terrible, let’s get out of here” He replies “Yeah it is, but we spent a lot on  these tickets, we can’t just leave now” This is the sunk cost fallacy. You've spent the money either  way, if you stay or go. Another Example… Maybe you have a  girlfriend that is continually unfaithful, but you keep forgiving and accepting her  back.

You may say things to yourself like “I’ve invested so much time, energy and love  into this woman, I can’t give up on her now” If you catch yourself saying things like  …. “I’ve come so far. .

. . ” or ….

. “I spent so much on this stock, I can’t sell it  now” when the price is falling…. .

You are probably encountering the sunk cost fallacy. The sunk cost fallacy can especially plague  investors decision making in the stock market. To be more rational, look at the current status  and forecast of the stock, or relationship and don’t put too much weight into the past  investments of money, time, energy or love.

The Framing Effect Which meat would you like to buy? 99 percent Fat Free or 1 percent fat Most people, when asked, go for Option  A even though they are identical. How about now?

98 percent fat free or 1 percent fat? Most people STILL go for option A. This is the framing effect We often draw different conclusions from  the same information depending on how it's presented.

Be on the lookout for how different  news outlets frame their headlines and stories and how companies frame their offers. Here we have a small size  popcorn for $3, and large for $7. Which would you choose?

In this case a higher percentage are  inclined to go for the cheaper alternative. Now, let me introduce a third  option. A Medium size for $6.

5 Studies show that when given these three options, a much higher percentage will choose the large  because they see it as the most valuable option. The small and the large prices are exactly the  same, but the decoy changes your perception, and influences your decision making  towards the more expensive option. When the Economist magazine  gave readers these two options, they were quite disappointed with the  results.

Most opted for the cheaper option. When they introduced a third decoy  option, and skyrocketed their sales by 43% The offer was exactly the same, but the print  and web offer now appeared much more valuable. The bills are overdue!

Honey, would you mind paying the bills. It’s not what you say, but how you say it. Would you like to pay by cash or credit card?

If the sign showed a cash discount of  5%, people wouldn’t feel that bad about missing out on the “discount” for the  convenience of using their credit card. If the sign showed a credit card surcharge of  5%, people would be inclined to avoid the fee. On closer inspection though,  they are exactly the same thing.

There is a 90% chance you  will survive this operation. There is a 10% chance you  will die from this operation. Same outcome.

Different frames. The words we use affect the emotions we have  towards making certain decisions. The Clustering Illusion Have you ever seen faces in the  clouds?

Jesus on toast or Faces on the rock formations of Mars. The  human brain seeks patterns and rules. For the most part the clustering illusion is harmless, but it does have  real world implications.

Investors who rely on technical analysis of  charts, have an uncanny ability to derive all kinds of patterns and predictions from  the data. They often sense patterns, and make risky investments,  where none ever existed. Take a moment to observe  this string of X’s and O’s.

Is the sequence random or planned? Even though they are completely  random, people when asked will often come up with all sorts of laws or  rules to explain the pattern of letters. To overcome your sensitivity  to pattern recognition, try to regain your skepticism.

If you  find a pattern, ask yourself if it is more likely to be pure chance or am I  falling for the clustering illusion? Exponential Growth If you fold a piece of paper in  half, and then in half again and continue to do that 50 times. How  thick would it be after 50 folds?

If you guessed a few inches  thick, you would be slightly off, because the paper would be so thick. It  could nearly reach the sun from Earth. Linear growth is intuitive to  us.

Exponential growth, however, is incomprehensible to us. But why  is that so? Because, simply put, It wasn't needed before.

Our ancestors  mainly had linear experiences. Let’s use this hypothetical country with  some hypothetical examples of growth. The inflation rate of this country is 5%.

Intuitively, if we are being honest, we  have no real idea what that even means. “Only 5%” some people may  remark, “that isn’t so bad! ” If instead I told you, in 14 years, your  money will be worth half what it is today, you can understand that without much thought.

And  it may actually give you some reason to worry! "The greatest shortcoming of the human race is our inability to understand the  exponential function. " - Al Bartlett "The power of compounding is the most powerful  force in the universe.

" - Albert Einstein To illustrate the power of exponential  growth, if we place one grain of rice on the first square of this chessboard,  two grains on the second square, four grains on the third square, and  so on, doubling the number of grains on each subsequent square. How many grains of  rice would we need to accomplish this task? In the short term exponential  growth isn’t that impressive, but the growth that occurs at a faster  and faster rate over a long term is truly amazing and can quickly become  astronomical and incomprehensible.

To complete the task you would need 18  Quintillion grains of rice, which is a number that we can’t even begin to wrap our  heads around and illustrates how quickly a small amount of something can grow when it is  subject to the power of exponential growth. If you want to approximate the time  it would take any process to double, or you need a way to describe something  that is more intuitive, use the rule of 70. 10% returns on investment = your money will  be worth double that in approximately 7 years.

8% percent inflation = Your money is worth half  what it is today in approximately 8. 7 years. A country has 5% population  growth = The country will have double the population in approximately 14 years.

Of course these growth rates  would need to remain constant, and the world is full of uncertainties  and complexities, however these are much more intuitive than just saying “The  current inflation rate is X percent” Be careful with exponential growth. Never  trust your intuition about exponential growth, because we don’t have any. Where possible try to convert the growth rate into  something linear with a time frame.

Barnum Effect For you, the viewer, you may find  it surprising that I know you. You have a great need for other  people to like and admire you. At times you have serious doubts as to  whether you have made the right decision You pride yourself as an independent thinker.

At times you are extroverted, affable, sociable, while at other times you are  introverted, wary, reserved. Was I close at giving an accurate  description of your personality? Bertram Forer in 1948, conducted an  experiment whereby people were given the same text of generalized statements  found in astrology magazines.

He then told each participant that he had personally  written the statement just for them. 86% found that the text was an accurate  description of their personality. This is the Barnum Effect, when we easily  attribute our personalities to vague and generalized statements, even if they  can apply to a wide range of people.

The next time you remark “Omg that is  so me” when reading your horoscope or doing an online quiz on what type of spirit  animal you are, just remember that people are easily fooled by horoscopes, Palm reading  and psychics due to the Barnum Effect.