This post focuses on how confirmation bias affects our decision making. Confirmation bias fallacy is one of those psychological biases that you can see everywhere. Similar to cognitive dissonance. We all suffer from it. It’s both humorous and serious. But because of that, it’s useful to know how to avoid confirmation bias. 

If you’re wondering ‘ what is a bias ‘ or ‘ what is cognitive bias ‘, the bias psychology definition refers to our tendency to make decisions or take actions in an unknowingly irrational way. The cognitive bias definition is when we make systematic errors as a result of our heuristics (i.e. shortcuts) in decision making.  Biases examples are everywhere. But we’re working through the list of cognitive biases one-by-one in this series.

For this post, we’re focusing on confirmation bias fallacy examples and other cognitive bias examples related to it. Specifically, we’ll also touch on cognitive dissonance theory. To end, there’s a challenge (as always). Or rather, just some tips on how to avoid confirmation bias psychology.

I’m using a food diet as an example of bias confirmation because I know it’s one we can relate to. You either are an ardent believer in the types of food you do and do not eat, or you know someone else who is. Don’t take the example as criticism, it’s just an illustration of bias types and how we affirm our pre-existing attitudes. What you do need to recognise is that we all do it. We all seek out and process information supporting our confirmation biases.

If we really want to make the best decisions when processing information and avoid decision bias, we should gather, study and interrogate all the information and research available. This is how to avoid confirmation bias in research.

We deal mostly in assumptions, and the vaguer they are, the stronger our confirmation bias. Whether you believe that your boss is inherently good or inherently bad, you will find proof daily that supports your belief. If you have ever wondered why it’s extremely difficult to have an intelligent conversation with someone about climate change – you now know why (it might prove to be an interesting confirmation bias experiment though).

Writer Aldous Huxley has stated that “facts do not cease to exist because they are ignored.” But we have become blind to disconfirming evidence and selective in how we interpret information. This is why our ancestors believed the earth was flat for as long as they did! If you want to know how to fight confirmation bias, you need to challenge yourself.

According to Warren Buffet: “What the human being is best at doing, is interpreting all new information so that their prior conclusions remain intact.”

Astrologers, economists, religious leaders, politicians, journalists… they all do it. Religious and philosophical beliefs are a particularly fertile ground for the confirmation bias. Experimental psychology suggests that it is a powerful bias in its manifestation.

Now that you’re aware that you hold strong opinions about things and that you’re always trying to confirm those opinions, what happens when you’re presented with irrefutable information that tells you otherwise?

Consider Aesop’s fable of the fox and the grapes:

The theory of cognitive dissonance refers to how we seek consistency amongst our beliefs or opinions (referred to as our cognitions). Looking at the work of social psychologist, Leon Festinger, we need that consistency to function mentally in the real world. When there is inconsistency between our cognitions (referred to as ‘dissonance’), something must change to eliminate the dissonance. The dissonance reduction and forced compliance is required to preserve our mental health. We need to rationalise the situation in some way or another to eliminate that dissonance.

So, we tell ourselves that another job will not be as flexible. We tell ourselves that there’s nothing else out there. We create a logical fallacy using cognitive biases creating yet another example of cognitive dissonance.

It’s a mental conflict that we experience. We’re being presented with evidence that our assumptions or beliefs are incorrect, and because we as humans tend to exhibit a strong degree of self-denial, we need to do something to eliminate that conflict (called cognitive dissonance). The scariest part is all the ways in which we can be convincing to ourselves, particularly with biased decision making. Now that you know about it, you’ll see examples of cognitive dissonance everywhere.

You need to fight against confirmation bias and limit decision making bias. Start by writing down all your beliefs – investment strategies, choice of diet, parenting style – and seek out disconfirming evidence and data. This will feel like hard work but once you have that initial counter evidence, you can then weigh up all the evidence, edit what you need to, and make an informed decision. This is how to avoid confirmation bias fallacy. How rewarding to steer ahead with your beliefs knowing that your opinion or hypothesis is an objective one not influenced by human bias. You need to pro-actively learn how to avoid bias. And, as hard as it will be, an attitude change when you realise you’ve been blind to the truth is better than continuing to live in a false reality.

When making any decision, consider all the information. This could mean reading some reviews (both good and bad) of an item before you buy it. Or just hearing what other people have to say about things, even if you disagree. Take a moment and think about the people you tend to ask advice from (an easy confirmation bias test )? While it does make life easier to hear what you want to hear, open your mind to alternatives, mix up the influencers in your life, and be informed. This is how to avoid confirmation bias in decision making and ensure cognitive consistency.

Listen to a 6 minute interview with Dr Gizelle Willows and Simon Brown on the impact of confirmation bias with your investing decisions

• Heuristics and biases in decision making – This was the first post in the series which shares some behavioural economics research. Specifically, the heuristics and biases that influence our relationship with money. It uses System 1 and System 2 thinking examples from Daniel Kahneman’s New York Times best selling book, Thinking Fast and Slow, to help us be more conscious of the workings of our brain. 

• Mirror, mirror, on the wall, stop telling me I’m wonderful – This post focuses on the impact of overconfidence bias in decision making. It introduces the illusion of knowledge bias and the illusion of control bias to illustrate the difference between confidence and carelessness. It also discusses the better than average effect, the self-serving bias and fundamental attribution error. You’ll learn how to confront some unpalatable truths and get out of any false sense of comfort (if you’re up for the challenge?).

• Size does matter… when it comes to framing – This post uses framing effect examples to show how framing bias influences the way we interpret information and make decisions. We discuss glossing, the compromise effect, and how the size of the frame can influence the volatility of your investment portfolio.

• Loss aversion vs risk aversion – Once you understand framing, you’re ready for this post. It introduces an incredibly powerful bias known as loss aversion. It also touches on prospect theory, the disposition effect and impression management.

• Anchors pulling you down? – Anchoring bias is a straightforward behavioural bias that causes us to focus on a certain initial value and then make decisions with reference to it. This post looks at some examples of this anchoring effect.

• The danger of the default – Default options nudge us to make better decisions. The option of opting out also respects freedom of choice. This post unpacks this notion of libertarian paternalism and the perils of status quo bias.

• Regret, it’s not a nice feeling – Regret influences the decisions we make and pushes us to conform to social norms. Examples of regret avoidance show us how this makes complete sense yet no sense at all.

• When the past influences the future – The Concorde effect is a famous example of sunk cost investment. Too often we invest time, money and energy into something we should’ve just abandoned. This post looks at some examples of how sunk cost fallacy affects our human decision processes.

• What’s mine is more valuable – In this post, you’ll learn why you place extra value on things you own. The endowment effect has implications for our investment portfolio, bonuses and consumer behaviour.

• How to improve self-control – Self-control is an essential life skill. It’s what separates humans from the rest of the animal kingdom. Learn how to improve self-control to achieve your long-term goals.

• Procrastination is the enemy of success – We know procrastination is the enemy of success. But while it looks like laziness, it’s often just mental exhaustion at play. Learn how to overcome procrastination.

• The problem with wanting it now – When you delay instant gratification, you will experience long-term satisfaction. It’s the hyperbolic vs exponential discounting debate. Don’t let present bias win!

• The power of first impressions – The order of information influences your decisions. First impressions matter! It’s all got to do with primacy and recency effects.

• We prefer wrong information to no information – Availability bias and survivorship bias influence our decision-making. We make decisions based on the information available to us.

• Learn to deal with uncertainty – Risk and uncertainty will always surround us. Gambler’s Fallacy, the hot-hand effect, the law of small numbers & ambiguity aversion are just some of the biases that arise because of it.

• Stop stereotyping – Representativeness heuristic refers to the fact that we stereotype. It’s a mental shortcut. But beware of making unfounded comparisons.

• Mental Accounting – Money is money! Or is it? Mental accounting says we place different values on different money which leads to irrational decision making.

• Money Illusion– Money illusion is a sneaky bias. It causes us to focus on the amount of money in our hands, rather than it’s purchasing power.

• Home bias – We invest close to home and in what we know. But this lack of diversification results in missed opportunities. Say hello to ‘home bias’.

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