xconfcogntivebias v0.4

7/30/2019 xconfcogntivebias v0.4

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Cognitive

BiasBy

Fahad NariRam Ramalingam


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A game to start of the session

Question 1

Program A: "200 people will be

saved"

Program B: "there is a one-thirdprobability that 600 people willbe saved, and a two-thirdsprobability that no people will besaved"

Question 1

What was your 10th classpercentage

What percentage of Africannations are in the UN

Question 2

Program C: "400 people will die"

Program D: "there is a one-thirdprobability that nobody will die,and a two-third probability that

600 people will die

Question 2

How old are you

What percentage of Africannations are in the UN

1. There is a disease outbreak. And you have a choice as the Govt, of goingahead with 2 programs

2. Just 2 easy questions to answer


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Cognition

The term cognition (Latin: cognoscere, "to know) refers to a faculty forthe processing of information, applying knowledge, and changingpreferences (recognize, incognito, cognizant technology solutions )

This applies to processes such as memory, association, conceptformation, language, attention, perception, action, problemsolving and mental imagery


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What is Cognitive Bias?

Definition

A cognitive bias is the human tendency to make systematic errors injudgment, knowledge, and reasoning. Such biases can result frominformation-processing shortcuts called heuristics.

They include errors in statistical judgment, social attribution, and memoryerrors.

Cognitive biases are a common outcome of human thought, and oftendrastically skew the reliability of anecdotal and legal evidence.

It is a phenomenon that has been studied extensively in cognitivescience and social psychology.


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Pioneers of Cognitive Bias

Amos Tversky& Daniel Kahneman (Nobel Prize for Economics, 2002)

1. Rational Choice -> Optimising2. Innumeracy -> Satisficing3. Prospect Theory -> Behavioural Economics


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Causes

1. Bounded Rationality

2. Attribute substitution

3. Dissonance reduction

4. Introspective Illusion

5. Heuristics

6. Adaptive Bias

7. Statistical misrepresentation


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Bounded Rationality

1. In decision making, rationality of individuals is limited by theinformation they have, the cognitive limitations of their minds, and thefinite amount of time

2. Decision-maker is a satisficer, not Optimizer

3. Proposed by Herbert Simon as an alternative to Economic modeling;it complements rationality as optimization1. limiting what sorts of utility functions there might be.2. recognizing the costs of gathering and processing information.3. the possibility of having a "vector" or "multi-valued" utility func

4. Example: Anchoring effect; Selective perception


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Attribute Substitution

1. When making a judgment that is computationally complex, we tend tosubstitute a more easily calculated heuristic attribute

2. Intuitive substitution rather than self-aware/reflective

3. When does it happen

1. The target attribute is relatively inaccessible2. An associated attribute is highly accessible e.g. priming (game

2)3. The substitution is not detected and corrected by the system

1. A bat and a ball together cost $1.10. The bat costs $1 morethan the ball. How much does the ball cost?

Most people guess the answer as $1.0 for Bat. $0.10 for ball. Did you?


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Dissonance Reduction

1. Cognitive dissonance is an uncomfortable feeling caused by holdingconflicting ideas simultaneously

2. People have a motivational drive to reduce dissonance - by justifying,blaming, and denying

3. Aesops fable: Fox and the grapes

4. Ben Franklin effect winning over a political opponent by borrowing arare and curious book

5. Effort justification etc


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Causes

1. Bounded Rationality

2. Attribute substitution

3. Dissonance reduction

4. Introspective Illusion thinking you have thought and understood

5. Heuristicsbasing ones experience over other facts

6. Adaptive Bias Cost optimized more than count. Type I and Type II

errors

7. Statistical misrepresentation using correct data for wrongconclusions. E.g. Black swan


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Types of Cognitive Bias

1. Decision Making Bias

2. Probability and Belief Bias

3. Social Bias

4. Memory Bias


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Decision Making Bias


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Anchoring Effect

Basing one's judgment on just one source of information

Caused by Attribute substitution


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Anchoring Effect

E.g.1 . Gen example: Amos Tversky and Daniel Kahneman in one of theirfirst studies, the two showed that when asked to guess the percentage ofAfrican nations which are members of the United Nations, people whowere first asked "Was it more or less than 10%? guessed lower values

(25% on average) than those who had been asked if it was more or lessthan 65% (45% on average)

IT World-

Giving just one estimate/cost for projects often backfires because of this

people tend to stick to numbers and dont budge easily


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Bandwagon Effect

Groupthink - the tendency to do things because many

other people do the same

Caused by Attribute substitution


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Bandwagon Effect

Example1: When everyone started doing ERP/DWH/Agile... Thats

bandwagon effect.

Example 2: When ULIP schemes were launched in India, UTI etc. created

a media storm that had everyone buying and regretting later

IT world:

+ using statistics to convince: Quote Forrester research on Agile efficiency

to convince customer

- Blindly using some tools or techniques from other experience?


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Confirmation Bias

Confirmation bias refers to a type of selective thinkingwhereby one

tends to notice and to look for what confirms one's beliefs,

and to ignore, not look for, or undervalue the relevance of what

contradicts one's beliefs caused by heuristics and bounded rationality


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Example 1 : Superstition of a black cat crossing your path and something

bad happens to you on the same day

Example 2: Derren Brown Astrology hoaxes

IT examples: ??

Confirmation Bias


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Selective Perception

Tendency for expectations to affect perception

Caused by attribute substitution


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E.g.1: Not taking inputs from some users. Ignoring some info, because

we prejudice that they usually don't make sense. Listening only to the

loudest speaker etc.

E.g.2.: Ignoring user testing when building a product for a larger

audience

Selective Perception


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Probability/Belief Bias


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Zero Risk Bias

Preference for reducing a small risk to zero over a greater

reduction in a larger risk

E.g. People not insuring high risk event and investing for high

risk high return


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Availability Heuristic

The availability heuristic is a phenomenon in which people predict the

frequency of an event, or a proportion within a population, based on

how easily an example can be brought to mind

E.g. Smoking is perfectly fine as my grand dad lived for 100

years.


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Social Bias

Bias that arise during social interactions due asymmetry

in situation or perceptions of personality


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Halo Effect

The tendency for a person's positive or negative traits to

"spill over" from one area of their personality to another in

others' perceptions of them

Example : Ipod makes us think all apple products are good.


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Illusion of Transparency

Experiment:

Need a volunteer who can do theoccasional table-top drumming


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Illusion of Transparency

People overestimate others' ability to know them, and they also

overestimate their ability to know others.

Examples 1: In the domain of public speaking, for example, individuals who

are nervous about delivering a public speech believe their nervousness is

more apparent to their audience than it actually is


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Memory Bias


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Hindsight Bias

Hindsight bias is the inclination to see events that have occurred asbeing more predictable than they were before they took place. Also

known I-knew-it-all-along-effect

Example1: Someone predicts rains and it happens the next moment and

they claim as if they I-knew-it-all-along-effect


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Self Serving Bias

A self-serving bias occurs when people attribute their successes to internal

or personal factors but attribute their failures to situational factors beyond

their control

E.g. 1 : Blaming failure of peace in Kashmir upon Pakistan

E.g. 2 : Devs blame BAs when stories change during development :D


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Conclusion

These topics are not comprehensive. They are quite complex, as Fahaddiscovered much to his consternation

The lesson here, is not to start looking for each of this biases in everyactivity we do, but keep in mind.

Understand that a BAs job is not just to trans-literate, but actively findways to account for and overcome the bigger impact biases


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Sources

Wikipedia

Images from images.google.com

Istock photos

Getty Images

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