This is the 2007 version. Click here for the 2017 chapter 07 table of contents.

Classic Biases and Errors

It should be no surprise that research shows humans are not perfectly rational decision makers. A well-known body of work in cognitive psychology revolves around identification of biases and fallacies in human reasoning. Some of the most famous-with a simple example of each-are listed below. Many were identified by Amos Tversky and Daniel Kahneman, Israeli-American psychologists who studied human reasoning for many decades. Tversky, who died in 1996, was a McArthur "Genius Award" winner; Kahneman won a Nobel Prize in Economics in 2002, although he never took a course in economics and spent his entire career as a psychologist.

What are some widely-known decision-making biases of humans?

People give negative consequences more weight than equal positive consequences. [For example, Tversky found that students refused to stake $10 on a coin flip if the odds of winning were 50/50. On the average, they required a $30 payoff before they would take the chance.]

People do not deal rationally with very improbable events. [They will enter sweepstakes and lotteries in which their chances are minuscule, or they will be afraid of an elevator crashing to the ground or a shark attack at a beach, all extremely unlikely events.]

People ignore summary statistics, such as base rate information, in favor of concrete, anecdotal information. [Richard Nisbett pointed out that people will base a decision on something they heard from a friend, rather than relying on accumulated statistics. Consumer Reports may show that Volvos are very reliable, but a person might avoid them because "My brother had trouble with his Volvo and says he will never buy another."]

People show a "confirmation bias " [They fail to change their minds when faced with evidence that their beliefs are incorrect, and they select evidence which supports their pre-existing beliefs.]

People overestimate the frequency of events that come readily to mind (the "availability heuristic"). [For example, people think airplane crashes are common because they easily remember examples of plane crashes.]


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