Monday Mornings with Madison

Thinking Errors and Business: Confirmation Bias, Part 1

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Estimated Read Time: 5 1/2 min.

Confirmation Bias:  The Mind Wants to be Right

Has this ever happened to you?  You believe something to be true, and then a research study you read confirms that what you believed to be true is, in fact, true.  Days later, you hear something else that validates the same idea.  You research further, and the articles you find also validate your thinking.  You think “Aha, I was right!”

Or, you recall some data that proves a point you were making, even though the overall data may have actually been inconclusive or conflicted.  But, as you pore through additional studies, the information you find endorses what you believed to be so.  It affirms your previously held beliefs.  You feel better because you were right.  You think to yourself, “I am right again!” or maybe even “I am always right.”

One problem.  You are likely experiencing Confirmation Bias.

Confirmation bias is the tendency for people to search for, interpret, favor, and recall information that confirms their own preexisting beliefs or hypotheses.[1] People also tend to interpret ambiguous evidence as supporting their existing position.  And they tend to prefer information they learned first over conflicting information they learn later.

Therefore, decisions made based on information affected by Confirmation Bias is just that…. biased or slanted; not objective.  It is a cognitive bias or thinking error… a flaw of systemic inductive reasoning.  The more emotionally charged or deeply entrenched the belief, the more that Confirmation Bias occurs.

Confirmation Bias is a type of thinking error… one of over 180 thinking errors.[2] Thinking errors arise from our:

1) need to act fast,

2) difficulty in deciding what to remember/store,

3) having to deal with too much information, or

4) dealing with information that does not have enough meaning.

Confirmation Bias manifests itself in a multitude of ways, some of which may be intentional and much of which is unintentional.  Even scientists have had a tendency over time to test ideas in a one-sided way, focusing on one possibility and ignoring alternatives in order to prove a point.  This, in turn, creates bias in people’s conclusions. That explains why people believed falsely for thousands of years that the world was flat and earth was the center of universe.

But we don’t even have to go back millennia to find Confirmation Bias in science.  Eight years after the discovery of x-rays in 1895 by German researchers, René Blondlot announced he had discovered another previously unknown form of radiation — N-rays. Blondlot, a French scientist, said they could only be observed using peripheral vision, and seen as a corona when electricity was discharged by crystals. This “discovery” was debunked when Robert Wood, an American scientist, visited Blondlot’s lab and found that Blondlot still observed N-rays even after Wood secretly removed the crystal during one of the experiments.  Blondlot’s theory was discredited.  However, something strange happened after that. For years, other French scientists continued publishing papers that described their observations of N-rays, as if they really existed.  In a curious show of xenophobic pride, French scientists wanted to see N-rays, and so they did.  This didn’t happen with scientists of any other country.[3]

So, when even scientists set out to prove what they believe, their pre-existing beliefs shape the methodology they use for their studies and the analysis of their data which invariably confirms their original premise.  Reasons for Confirmation Bias in such situations include wishful thinking and weighing the costs of being wrong, rather than investigating in a neutral, scientific way.  Indeed, some of that is intentional and manipulative.  But, even when completely unintentional, Confirmation Bias is hard to avoid because the mind has a tendency to see what it wants to see, regardless of evidence to the contrary.

Types of Confirmation Bias

In a nutshell, Confirmation Bias is when our need to confirm what we believe directs or controls our search, acceptance, interpretation and recollection of information.  There are various types of Confirmation Bias.[4]

1.  Belief Perseverance – is when beliefs persist even after the evidence for them is shown to be false.  This accounts for why racial discrimination, religious intolerance, gender bias, xenophobia and other areas of prejudice persist even when so much research and literature has proven these kinds of biases to be wrong, false, illogical and harmful to individuals and society.  And Believe Perseverance continues to persist even if the belief costs the person money.[5]

2. Attitude Polarization - is when a disagreement becomes more extreme even though the different parties are exposed to the same evidence.  For example, Attitude Polarization is at work in situations where video evidence indisputably shows what took place in a confrontation between law enforcement and the public, yet each side will argue ever more vehemently in favor of their position.  Instead of putting the question of culpability to rest, video evidence often actually pushes each side to a more extreme stance of their original position.  It isn’t hard to see how Attitude Polarization would affect politically-charged situations such as treatment of refugees, decisions about political boundaries, issues involving environmental disputes, and so on.  Even when looking at the same evidence or information, opposing sides will not only experience Belief Perseverance, they adopt an even more extreme position.  Attitude Polarization also explains why political parties tend to move further apart on hot issues over time.  Now think about how Attitude Polarization might affect the decisions of business leaders.

3.  Irrational Primacy Effect - is when there is a greater reliance on information encountered early (in time) in a series.  That means something learned first carries more weight than contradictory information learned later.  So what children are taught early in life carries greater weight than contradictory information they might learn later.  Consider the power that Irrational Primacy Effect has when any new topic is introduced to people such as Genetic Engineering, Artificial Intelligence or Crypto-Currencies.  How that information is first presented will carry more weight in most people’s minds than arguments against it made later.  Consider the implications of Irrational Primacy Effect on purchasing decisions.

4.  Illusory Correlation – is when people falsely perceive an association between two events or situations.  An example of this might be that a person catches many fish in one place at a lake.  Thereafter, the person believes that the place where he caught many fish is a place where there are more fish than at other places at the lake.  But it’s possible, even likely, that it was actually just a chance event.  Or a person travels to a city she hasn’t
visited before.  A few people in that city are rude to her and she concludes that the people in this city are more rude than people in other cities.  But that may have just been random events.  Consider how a business could use Illusory Correlation to create business narratives that lead customers to associate two events or situations.  For example, a customer’s great experience dealing with one employee at a company leads the customer to believe that the entire company’s customer service is exceptional.

Confirmation Bias in Business

As some of my examples show, Confirmation Bias – in its many forms — has a profound effect on business.  Imagine… decisions made on biased or flawed information will thus also be flawed.  That is likely bad news for business leaders.  Confirmation Bias causes leaders to make many mistakes.

Case in point.  Consider the Confirmation Bias that caused the leaders of Borders Books to decide to outsource their online book sales to Amazon.  They believed that customers would never want to buy books online and that ecommerce would never dominate book sales.  They believed that their business partner would never be able to master the book selling business on their own, and would always need Borders to guide what books to sell.  They believed these things because that’s what they wanted to believe.  They focused on information that confirmed what they believed while refusing to believe the data that showed that things were changing.

Next week, we will look more deeply at how Confirmation Bias affects business decisions and how it can be leveraged by business to help drive a company’s fan base and story narrative.  Stay tuned!

Quote of the Week

“People put a lot less effort into picking apart evidence that confirms what they already believe.” Peter Watts


[2] September 1, 2016, Buster Benson, Cognitive Bias Cheat Sheet, Better Humans, https://betterhumans.coach.me/cognitive-bias-cheat-sheet-55a472476b18

[3] July 13, 2010, Christ Lee, ARS Tecnica, Science, https://arstechnica.com/science/2010/07/confirmation-bias-how-to-avoid-it/

[4] 1995, Joshua Klayman, Psychology of Learning and Motivation, Varieties of Confirmation Bias, Volume 32, Pages 385-418, https://www.sciencedirect.com/science/article/pii/S0079742108603151

[5] November, 2015, Michael Cipriano and Thomas S Gruca, The Power of Priors: How Confirmation Bias Impacts Market Prices, The Journal of Prediction Markets, DOI: 10.5750/jpm.v8i3.974

© 2018, Written by Keren Peters-Atkinson, CMO, Madison Commercial Real Estate Services. All rights reserved.

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