In an endeavour to help its members remain up to date in various fields, VIA (Vidarbha industries Association) HRD Forum has been organising a series of talks on different topics. One such talk titled ‘The Psychology of Misjudgement’ was conducted by Vinayak Gavankar, Director of ISD Training Centre at VIA.
Gavankar said that psychologists and behavioural scientists have been studying the decision making process for a long time. They started with observing the behaviours of birds and animals. They realised that sometimes a particular colour, sound or smell etc., can easily mislead birds and animals. Due to this, their decisions go wrong. For example, ants dragging and throwing out an ant (who’s still alive) out of their community (assuming her to be dead) due to a particular smell, or a mother turkey bird hugging and kissing an enemy bird if a particular sound is being played. All these instances of misjudgements created inquisitiveness in behavioural scientists and they started wondering whether it this psychology is simply restricted to birds and 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.
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, one wrong investment decision can lead to wiping out of millions of dollars. And, if you are a leader of the country, your one decision can change the course of history.
He then described some of the cognitive biases and how they affect our decision making with suitable examples. He said the first bias is Incentive Bias – people are driven by the incentives and 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, which means that we tend to stick to our opinions even if later it turns out to be wrong. The third bias is called Authority Bias, which means that we tend accept and follow instructions of an authority even if the instructions are wrong. The fourth bias is called Availability Bias, which means that we tend to take decision based on the recent and available information around us rather than studying the base rate probabilities. The fifth bias is known as Social Bias, which means that we tend to do what others are doing even if that is wrong or inconvenient. The sixth bias is called Framing Bias, which means that we take decision not on the basis of data but the way the data is presented. The seventh bias is called Survivorship Bias, which says that even if we are doing something risky 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, which says that people react irrationally if something is first given and then taken away from them, even if that something is not needed by them. Therefore businessmen should be very careful while withdrawing any scheme from market, or the facilities given to staff. The ninth is called Anchoring Bias, which says that we tend to stick to wrong anchors in life, which leads to misjudgment. The tenth bias is called Liking Bias, which means that due our liking for a particular thing or person, we tend to ignore the other weaknesses and drawbacks in that particular thing or person. This results into staff complaining of their boss favouring a particular person and ignoring his late coming or early going or buying expensive products with less utility etc. The eleventh bias is called Disliking Bias, which is the 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 that 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, which says that our decision-making ability gets influenced by the contrasts in values. The fourteenth bias is called Associative Bias, which means that we subconsciously try to associate the qualities of one person with another and if we have positive feelings about the first person, we develop similar positive feelings for the other. The fifteenth bias is known as Loss Aversion Bias, which means that 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.
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 misjudgments and 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 judgment.
While Vice President of VIA Aditya Saraf and former Chairman of HRD Forum Hemant Loda gave an opening remark, programme Coordinator Neelam Bowade, conducted the proceedings, introduced the speaker and also proposed the vote of thanks.