COGNITIVE BIASES AND THE DANGER OF THE DECISION-MAKING GAP
problems.”9 Understanding their impact on the portfolio of an organization’s attributes to include culture, communication, engagement, boundaries, influence, and relationships is critical to successfully managing its performance. Such insight has proven largely useful for customer-facing organizations where, for example, “operational transparency” and customer service are critical for attracting and retaining clientele.10 The good news is that, regardless of the target audience, awareness and the application of proactive strategies can help anyone think more clearly and make better overall decisions. According to a recent study, debiasing training can improve [one’s] ability to make rational decisions and avoid the errors commonly associated with faulty ways of thinking.11 This is why education and training are necessary to effectively address cognitive biases, especially in the workplace.
The following are seven common examples of cognitive biases 12
Anchoring Bias Salespeople exploit our susceptibility to the anchoring bias, wherein we use an initial piece of information as the yardstick for measuring other information. After seeing the sticker price on a new car (i.e., the initial information), a buyer might feel like they’ve beaten the bank by negotiating the price down 15 percent. In reality the dealership still comes out ahead. The buyer only believes they received a deal because they are comparing the final price to the initial price. Pro Tip: An effective way to combat the anchoring bias is to immediately delay the decision (or in some cases, the conclusion). Then, during an information-processing window, conduct an appropriate level of research and analysis before reaching a conclusion. If someone walks into a dealership knowing the average out-the-door prices in their area, that sticker price will be less likely to sway them. The goal here is to avoid an over-reliance on the anchor, which is no substitute for due diligence. 25
