Wednesday, September 23, 2015

The Art of Thinking Cearly - Rolf Dobelli

Rolf Dobelli lists 99 fallacies, effects, illusions and biases which he says mess with our decision-making. By being aware of these biases and other stuff we can make clearer decisions from the head (even though it's quite clear that decisions are not made by the head and by the heart). Interesting academic exercise, several experiments which show how humans behave in a manner not in their best interests. If we knew of these biases, we would be much more happier, wiser and richer. Fun to read because of the puzzles posed, the experiments conducted etc. Also the kind of stuff you can drop on unsuspecting chaps.

1) Survivorship bias - overestimating chances of success (don't look at successes, look at failures)
2) Swimmers body illusion - you don't get good bodies by swimming (look in the mirror and give up)
3) Clustering illusion - oversensitive to pattern recognition (be sceptical of patterns)
4) Social proof - be sceptical when everyone seems to be endorsing something ('popular' claims)
5) Sunk Cost Fallacy - let go, don't endure or suffer because you invested in it and save yourself
6) Reciprocity - don't take stuff because you may feel like reciprocating
7) Confirmation bias - interpreting information to fit in with existing theories, beliefs (find fault)
8) Authority Bias - authority figures influence reasoning (challenge them)
9) Contrast effect - judging something in contrast to what is beside it
10) Availability bias - creating a picture of the world using examples that comes easily to the mind
11) It'll get worse before it gets better fallacy - it's what it says so be careful
12) Story bias - creating stories to find meaning (where none exists)
13) Hindsight bias - feeling like better predictors than we are, we are not
14) Overconfidence effect - thinking you know more than you actually know
15) Chauffeur knowledge - those who don't know really but put on a show with superficial knowledge (experts know their circle of competence)
16) Illusion of control - the tendency to believe that we can influence something we have no control over (you don't control much)
17) Incentive super-response tendency - how incentives compromise intent and reward (people have agendas)
18) Regression to mean - making wrong connections
19) Outcome bias - never judge a decision by its result
20) The paradox of choice - too many choices messes up quality of life, leads to discontent
21) Liking bias - when we like someone we want to buy stuff from that person (make people believe you like them, even through flattery)
22) Endowment effect -clinging to things emotionally and thinking they are worth more than they are
23) Coincidence - coincidences happen (don't get excited, it's nothing divine, we know)
24) Groupthink - everyone agrees and makes reckless decisions (speak up even if others don't)
25) Neglect of probability - neglecting low possibility of odds and going for large returns in making emotional decisions
26) Scarcity error - scarcity causes irrational decisions, don't buy stuff because its going out
27) Base-rate neglect - descriptions mask statistical reality (so don't)
28) Gambler's fallacy - there is no balancing force out there for independent events
29) Anchor - anchors, ball park is established
30) Induction - makes you believe in it and then it dumps you, false beliefs
31) Loss aversion - fearing loss more than we value gain
32) Social loafing - people loaf off in groups where they can hide (if two people pull they invest 93%, three 85%, 8 its just 49%), when individual performances are not directly visible, blends into group effort (make individual performances as visible as possible)
33) Exponential growth - we understand linear growth but not exponential growth (folded paper 50 times is 70 million miles thick)
34) Winner's curse - where the winner is the loser (don't go to auctions)
35) Fundamental attribution error - attributing stuff to one individual (look beyond)
36) False causality - Co relation is not causality
37) Halo effect - one aspect dazzles how we see the entire picture, people who are good in one area are believed to be good in all
38) Alternative paths - outcomes that could have happened but did not (risk is not directly visible)
39) Forecast illusion - predictions don't mean much (so be critical)
40) Conjunction fallacy - being attracted to plausible stories (for big decisions remember we are likely to choose plausible stories over what is more likely, be on guard)
41) Framing - we react differently to same messages framed differently
42) Action bias - acting when not required (hold back action if not required)
43) Omission bias - where inaction is seen as a better alternative to action for cruel outcomes
44) Self-serving bias - taking success and blaming others for failures
45) Hedonic treadmill - achieving things but realising that the feeling wears off after a while (avoid negative things you can't grow to like, expect little happiness from material stuff, aim for free time and autonomy since long term happiness comes from what you actively do)
46) Self-selection bias - why me (because you are there), and its not because of bad luck
47) Association bias - making false connections (if you lead a group tell them to give only bad news)
48) Beginner's luck - be cautious
49) Cognitive dissonance - Interpreting things the way you want to see them because it is convenient
50) Hyperbolic discounting - giving more when the reward is closer (avoid being impulsive)
51) Because justification - when you justify using a because you get more tolerance and help (use it)
52) Decision fatigue - Making decisions tires us (courageous decisions are made earlier than later)
53) Contagion bias - bias against items due to old connections
54) The problem with averages - don't buy averages because it could be a bad distribution
55) Motivation crowding - money does not always motivate, sometimes it does the opposite.
56) Twaddle tendency - saying something without knowing about it (better shut up)
57) Will Rogers phenomenon - Stage migration, migrating stuff to mess averages
58) Information bias - Data can drown, do your best with bare facts (excess information can kill)
59) Effort justification - overvaluing stuff because we put effort into it (be objective about the result)
60) The Law of Small Numbers - statistics about small entities can mislead
61) Expectations - expectations bring Pygmalion effects (lower them in uncontrollable situations)
62) Simple logic - be careful with what seems plausible
63) Fofer effect - vague and universal predictions may sound right
64) Volunteer's folly - leaving stuff you are good at to volunteer and feeling good about it
65) Affect Heuristic - making decisions by feelings not thoughts (smile)
66) Introspection Illusion - introspection does not unearth any knowledge (be critical with yourself)
67) Inability to close doors - write down what not to pursue and stop pursuing that
68) Neomania - nothing changes despite all predictions
69) Sleeper effect - messages remain after the source is forgotten (don't accept unsolicited advise)
70) Alternative blindness - there are more choices out there so look around
71) Social comparison bias - foster individuals more talented than you
72) Primacy and recency effects - first and last impressions dominate
73) Not invented here syndrome - we love what we do and give it more value then required
74) Black swan - big improbable events, hitch on positive black swans, avoid negative black swans
75) Domain dependence - what you master in one area is difficult to transfer to another
76) False consensus effect - your worldview is not that of the publics
77) Falsification of history - inaccurate memories, creation of flashbulb memories
78) In-group Out-group bias - prejudice against foreign stuff
79) Ambiguity aversion - don't get hassled by ambiguity and be hasty, tolerate ambiguity
80) Default effect - clinging to things as they are, even if obvious benefits are seen otherwise
81) Fear of regret - last chance! hurry us into follosh decisions, slow down
82) Salience effect - blinded by big irregularities and not seeing other factors
83) House-money effect - exuberant behavior when free stuff comes (and losing it)
84) Procrastination - will power depletes fast, counter depletion smartly
85) Envy - stop comparing yourself and make smarter decisions
86) Personification - human stories influence, so stick to facts
87) Illusion of attention - gorilla in the room, cell phones reactions, we are not attentive, be aware
88) Strategic misrepresentation - misrepresenting stuff as stakes increase
89) Overthinking - overthinking kills action
90) Planning fallacy - plans made on overestimated capabilities of self
91) Deformation personnelle - you see what you want to see
92) Zeigrnik effect - you remember what you want to and forget all else, 25-50 steps to get tasks done,
93) Illusion of skill - skill is overrated, chance works mostly
94) Feature positive effect - what exists means more than what's hidden
95) Cherry picking - projecting best stories (ask for failures)
96) Fallacy of a single cause - attributing everything to a single cause, people are not masters of their destinies, we are influenced by many factors
97) Intention to treat error - where test subjects vanish from the sample
99) News illusion - stop reading and seeing news, instead read books

That's the lot, give or take a couple (I seem to have missed one or two but I followed Dobelli's findings and ended with a 99 - hopefully most won't notice - until now). Perfect decision making is yours if you can avoid all these biases. But why do we have these biases? How do they serve us? What is perfect decision making and how does it serve us? Why should I not volunteer is I feel pride in volunteering and instead make the perfect decision of sticking to what I know and sending the plumber? How is leadership not so much about skill? Why is skill an illusion? Why should I be critical of myself so much, so often?

There are many aspects which can be debated primarily because ambiguity exists and wrong connections can be made in the many studies quoted. Much advise seems to be highly critical of what you are naturally inclined to do or seem to do. If studies conclude that most people are behaving in a certain fashion there must be a reason why. (don't quote some bias now and say this reasoning is false) But it is surely beneficial to know such biases exist and this knowledge will make one more aware. Hopefully I will be able to make better decisions now. (Or am I falling for survivorship bias and overestimating my chances of making better decisions because I read a book - come to think of it how many people made better decisions because they read a book? So we are back where we began which is nowhere - only now we have some fancy words to explain where we are.) I liked the stuff on decision and will power fatigue and the many pointers to communications which can influence people behaviors.

Dobelli is a novelist and an entrepreneur. This book got some flak for plagiarism. However all the stuff noted above seems to be from studies conducted and he gave credit. Ok, how much is actually the same words etc is debatable - the ideas themselves are debatable - and interesting. Why can't we keep it there? It's not like earth shattering stuff - ok people behave this way - and they are likely to behave the same way. So let's get on with it. (Or is this some bias that I am falling into owing to my fatigue of writing such a long blog? Maybe I should listen to twaddle tendency and just shut up. See, I am already getting better at this.)

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