[Super important] The trap of “cognitive bias” that can cause you unknowing loss! 5 Judgment Mistakes Smart People Never Make

``I am a person who can think logically.'' ``I am confident that I can make objective judgments.''

If you think so, you need to be even more careful. In fact, the more intelligent people or those in positions of responsibility are, the more likely they are to fall into the trap of ``cognitive bias'' unconsciously created by their brains.

Our brains sometimes choose "shortcuts" to process huge amounts of information in an instant. This shortcut is the true identity of cognitive bias. If left unaddressed, this can lead to failure in business, trouble in relationships, or even major regrets in life.

This time, we will thoroughly explain the ``5 Cognitive Biases You Must Know'' that are especially likely to lead to incorrect intellectual judgment.

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1. Confirmation Bias

“I only see what I want to believe” trap

Confirmation bias is the tendency to gather only information that is consistent with one's assumptions and beliefs, and to ignore or underestimate information that contradicts them.

• Why do smart people fall?

This is because people with strong beliefs and specialized knowledge tend to look for data to prove their ``correct answer.'' Once you believe that ``this is true,'' you get a sense of pleasure when you find evidence to support your belief, and you begin to overlook inconvenient facts.

• Specific example:

When you come up with an idea for a new project, you tend to only collect success stories and neglect the risk of failure and the strength of your competition.

• Countermeasures:

Dare to stand up as a ``Devil's Advocate''. Find someone who will deliberately challenge your opinion, and always ask yourself, ``If my idea is wrong, why is it?''

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2. Sunk Cost Fallacy

“Mottainai” is a trap that impairs judgment

A sunk cost is an expense (time, effort, money, etc.) that has already been paid and cannot be recovered. When we become so obsessed with this that we end up making decisions that hurt future profits, this is called the "sunk cost effect."

• Why do smart people fall?

This is because it puts a psychological and emotional brake on you, thinking, ``I've invested so much, I can't stop now.'' Logically, we should make decisions based solely on ``future profits,'' but regrets about the past dominate our thinking.

• Specific example:

Continuing to continue a business that is in the red or a project that is not producing results because ``I have the time to invest in it'' and cause further losses.

• Countermeasures:

When making your decision, ask yourself, ``If I were to start this project from scratch today, would I make the same investment as I do now?'' We need the training to separate ourselves from past events and make decisions based only on the current situation.

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3. Anchoring effect (Anchoring Bias)

The trap of thinking being tied to the “first number”

The anchoring effect is a phenomenon in which subsequent judgments and predictions are distorted by being dragged down by the first information (anchor) presented.**

• Why do smart people fall?

This is because it is difficult for humans to make accurate value judgments when there is nothing to compare things to, so they formulate their thinking using the presented numbers as a reference point. It works very powerfully in negotiations.

• Specific example:

When negotiating the price of a product, you end up using the higher price initially offered by the other party as your standard, and end up agreeing to a higher price than the originally fair price. Or being too slow in revising initial forecast numbers.

• Countermeasures:

Before looking at the numbers and conditions presented by others, it is important to set your own "objective standard values" in advance. Fix your comparison to data within yourself, rather than external stimuli.

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4. Halo Effect

A trap where “one shining point” covers everything

The halo effect is a phenomenon in which people are influenced by a person's outstanding characteristics or outstanding abilities, distorting their evaluation of other aspects of that person.

• Why do smart people fall?

This is because our brains use the trust shortcut that says, ``If you're a good person, you're bound to be right about other things, too.'' They tend to be particularly judgmental about charismatic leaders and companies with strong brand power.

• Specific example:

Overlooking the flaws in a proposal made by someone with good presentation skills, or overestimating the quality of services provided by a well-known company.

• Countermeasures:

Let's consider ``modularizing information'' by breaking down the target into elements. You can break the spell of Hello by evaluating each item separately, such as "Does this person have a great personality?" and "Does this skill have a high technical score?"

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5. Conformity Bias

Trap where “same as surroundings” seems to be the correct answer

Conformity bias is a psychological tendency to conform to the opinions of those around you or the majority rather than your own.

• Why do smart people fall?

This is because the more intelligent and responsible a person is, the more likely they are to suppress their discomfort out of fear of not wanting to disrupt the harmony of the organization or to avoid being isolated.

• Specific example:

Even if you are the only one who feels that something is wrong with a project that everyone agrees with at a meeting, you refrain from speaking up. As a result, we become complicit in collective misjudgment.

• Countermeasures:

It is about creating a ``psychologically safe'' environment within the organization. As an individual, it is effective to create a system that incorporates diverse viewpoints without relying on individual courage by officially establishing a role of ``devil's advocate''.

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Summary: Rather than “erasing” bias, “be aware” of it

Cognitive biases are difficult to completely eliminate due to the structure of the brain. However, by having a metacognition (objective perspective) that recognizes that you may be biased, you can minimize its impact.

Keep these five things in mind as a checklist to help you make smart decisions.

1. Confirmation Bias: Are you intentionally looking for contrary opinions?
2. Sunk cost effect: Are you abandoning your past attachments and only looking at the “now”?
3. Anchoring effect: Are you being swayed by other people's numbers?
4. Halo effect: Are you misperceiving the whole because of the quality of the parts?
5. Conformity bias: Are you being carried away by the atmosphere around you and ignoring the "unnatural feeling"?

Just having this perspective will dramatically improve the accuracy of your decision-making.