You agree with me, right?
Let’s imagine finding a dream house. Should we buy it? When making the decision, we might fall into what’s known in behavioural economics terms as the confirmation trap – or seeking information that agrees with what we want to hear. In a guest blog post for ING Direct USA’s We, the Savers, eZonomics wrote how with house prices, buyers might fall into this confirmation bias by selectively interpreting statistics to back up the decision to buy. “We might fixate on the higher price paid for a house down the street, while conveniently ignoring the lower price paid for a similar property a few blocks away.”
Biases affect the business world too
Research cited in a Harvard Business Review article by Nobel Prize recipient Daniel Kahneman and others tells how confirmation bias can filter into many different important decisions. It says research found that organisations achieved greater returns when they worked at reducing biases in their decision making. But the authors suggest it might be easier to spot biases in others than ourselves. But that in business, “decision makers can turn their ability to spot biases in others’ thinking to their own advantage”.
See if your choice stands up to a challenge
eZonomics suggests that simply being aware of the confirmation bias is a good first step to combating it. When assessing real estate, for example, try to view the purchase through the fresh eyes of a disinterested observer. Call those friends whom you know will challenge you on your decision—see if your conviction can withstand the pushback.