VIA HRD Forum holds talk on ‘The Psychology of Misjudgement’
In its endeavour to help its members remain up to date in various fields VIA HRD Forum has been organising a series of talks on different topics. One such talk titled ‘The Psychology of Misjudgement’ was conducted by Mr Vinayak Gavankar, Director of ISD Training Centre at VIA.
Mr Gavankar said the psychologist & behavioural scientist have been studying the decision making process for a long time. They started with observing the behaviours of birds & animals. They realised that the birds & animals sometimes get easily misled by a particular colour, sound, or smell etc. Due to this their decisions go wrong. For example Ants dragging & throwing out a live ant out of their community, thinking her to be dead, due to a particular smell or a mother turkey bird hugging & kissing an enemy bird due to the playing of a particular sound. All these instances of misjudgements created a curiosity in behavioural scientist & they started wondering whether it is restricted to birds & animals only or is it true for human beings also. Soon they got answer to their question when they found news of disappearance of Statue of Liberty.
He further said, when we are asked to read a sentence ‘Paris in the the Spring’ quickly & loudly we end up reading it as ‘Paris in the Spring’. Why does it happen? It happens because we have two types of brain. One is called Reflexive brain & the other is called Reflective brain. Reflexive brain is spontaneous, fast & effortless but prone to error. We are alive because of our reflexive brain. Depending on the circumstances our brain is constantly shifting the control between reflexive brain & reflective brain. In order to increase its efficiency our brain has developed certain short cuts. They are known as Cognitive biases. Now in most of the times these short cuts work fine but sometimes we get tricked. So becoming aware of these biases is very important.
Mr Gavankar added, “In business world if you are a CEO or CFO of an organisation then you know that your one decision can affect the lives of hundreds or thousands of people. Similarly if one wrong investment decision can lead to wiping out of millions of dollars & if you are a leader of the country, your one decision can change the course of history.
He continued & said, “Now this is where Mr Charlie Munger comes into picture. He is a billionaire partner of Warren Buffet & an authority on this subject. He says,” All I want to know is where am I going to die, so that I will never go there’.. What it means is if you want to take right decisions avoid taking stupid decisions because it is easier to avoid stupidity than to seek brilliance. This is known as principle of inversion which we have studied in Algebra. So if you can avoid the cognitive biases your chances of making a right decision will automatically go up.
He then described some of the cognitive biases & how they affect our decision making with suitable examples. He said the first bias is ‘Incentive Bias’- people are driven by the incentives & if the incentive structure is not right they may be motivated to behave wrongly. He cautioned the audience by saying, ” if you are a consumer you should be wary of all those professions where people are highly incentivised to push their products. So always ask what is their incentive to sell me this product? “
The second bias is called Commitment bias says we tend to stick to our opinions even if later it turns out to be wrong. The third bias is called Authority Bias says we tend accept & follow instructions of an authority even if the instructions are wrong. The fourth bias is called Availaibility Bias, says we tend to take decision based on the recent & available information to us rather than studying the base rate probabilities. The Fifth bias is known as Social Bias, says we tend to do what others are doing even if that is wrong or inconvenient. The Sixth bias is called ‘Framing Bias’, says we take decision not on the basis of data but the way the data is presented. The seventh bias is called Survivorship Bias, says even if we are doing a risky thing but nothing happens to us in the short run we tend to ignore the risk in the long run. The eighth is called Super Deprival Syndrome, says people also reacts very irrationally if something is first given & then taken away from them even if that something is not needed by them. Therefore businesses should be very careful while withdrawing any scheme from market, or the facilities given to staff. The ninth is called Anchoring Bias, says we tend to stick to wrong anchors in life & that leads to misjudgement. The tenth bias is called ‘Liking Bias’, says due our liking for a particular thing or person we tend to ignore the other weaknesses & drawbacks in that thing or person. This results into staff complaining of boss favouring a particular person & ignoring his late coming or early going , buying expensive products with less utility etc. The eleventh bias is called Disliking Bias : It is opposite of liking bias. In this we tend to ignore all the good qualities of a person or product because we dislike that person or product. The twelfth bias is known as ‘Reciprocation Bias’. This bias says we tend to reciprocate the favours done to us even if the person receiving benefits is our enemy or competitor. The thirteenth bias is Contrast Bias says our decision making ability gets influenced by the contrasts in values. The fourteenth bias is called ‘Associative Bias’, says we subconsciously try to associate the qualities of one person with another & if we have positive feelings about the first person then we develop similar positive feelings for the other. The Fifteenth bias is known as Loss Aversion Bias, says we feel the pain of loss more than the pleasure of gain hence many times we get tricked when people create fear in our mind of losing something.
He also said that there are some more syndromes & tendencies which lead us to misjudgement. In this cognition, we fail to notice the small changes coupled with low contrast which is often a trend that is destiny. One more syndrome which affects our judgement is called ‘Man with Hammer Syndrome’. Last is the tendency to believe the ‘Experts’. We feel if it has come from experts it must be right. Due to this we may misjudge & loose some good business opportunity. Hence we should focus on the content more rather than the labels of the person.
In conclusion we should be aware of all our biases, should not jump to quick conclusion, have a cooling period before taking an important decision, develop a checklist of all biases & use them regularly, make list of all our misjudgements & try to find out which biases caused them, have a member in your team who may have a different point of view & we should never be overconfident about our own judgement.
Earlier, Mr Aditya Saraf, Vice President – VIA & former Chairman of HRD Forum gave an opening remark, Ms Neelam Bowade, program Coordinator conducted the proceedings, introduced the speaker and also proposed the vote of thanks.
Posted by Vidarbha Industries Association on Wednesday, November 22, 2017