top of page
Search

Lies We Feed Ourselves: The Truth Behind Cognitive Biases and Its Effects On Cognition

Written by: Eva Rong

Here’s an interesting question I encountered in Daniel Kahnman’s book Thinking Fast and Slow:

Steve is very shy and withdrawn, invariably helpful but with little interest in people or in the world of reality. A meek and tidy soul, he has a need for order and structure, and a passion for detail.

Is Steve more likely to be a librarian or a farmer? (Kahneman, 2011)

A librarian, right? At least that was what I thought when I was reading the book; a librarian is meek and tidy, so Steve must be a librarian. But the truth is that there are way more farmers than librarians in this world, therefore, Steve is way more likely to be a farmer rather than a librarian. I learned after that this phenomenon is called a heuristic bias, a shortcut in our thinking process. We immediately connect meek and tidy to a librarian and not a farmer because we more often see a meek and tidy librarian.The human brain tricks itself without consciousness.

Guessing an individual’s career may not cause too much harm but it leads to something bigger and proves something bigger: we judge each other and make decisions upon our distorted, biased  thoughts. This is why understanding the effects of cognitive bias in our daily lives and its effect on our choices. It will allow us to view our decisions and surroundings differently, maybe in a way we’ve never seen before.

Intro to Cognitive Bias

Before we look into the effects of cognitive bias, we must understand what and how these biases are developed in our lives.

Cognitive bias is a systematic error in our thought process; they are errors in our judgements and thinking that may change the way we perceive others, the decisions we make, and process information (Ruhl, 2023). And heuristics are simply “shortcuts” the brain takes to make processing information easier for itself. In the context of businesses and in workplaces, overconfidence and the anchoring bias are the most commonly seen examples of biases.

Overconfidence and Illusion of Control

Do you often think that you’re above an average person in your workplace? Do you often believe that you have the control over the result of a situation? If so, you might have fallen into the overconfidence and illusion of control trap, which is often demonstrated at the same time. As Willows, (2020) reviewed: in an experiment conducted by Nassim Nicholas Taleb, “84% of Frenchmen estimate that they are above average lovers”. Said in its name, overconfidence is the tendency for individuals to be subjectively overconfident in their abilities or their control of situations. And the illusion of control bias is the tendency for individuals to believe that they have an influence on the outcomes of a situation despite that some outcomes were completely due to chance at times.

Anchoring Bias

Anchoring bias, in simple terms, “first impression” bias. Individuals who experience the anchoring bias have the tendency to rely on the first piece of information they receive when making a decision. The anchor, or the first piece of information influences our perception of other information. This first piece of information does not necessarily have to be correlated to the following piece of information to anchor our thoughts. For example, you could be told to recall the last two digits of your phone number, and this number could unconsciously alter your following judgement regarding numbers (Pilat & Krastev, 2021). The causes of anchoring bias are still being debated but psychologists believe that it is because people usually rely on existing information, especially the first, instead of processing new information.

Overconfidence and Anchoring Bias in Business 

Overconfidence

Although we experience bias almost everyday of our lives, workplaces and work-related decisions where we believe to be bias-free, are nonetheless affected by bias. Conducting a systematic literature review, Acciarini et al. (2021) categorized and evaluated 52 journal articles that were published between 1984 and 2019 to highlight the effects of biases on strategic decisions, important decisions that had been evaluated in many ways. It was concluded from these articles that decision-makers often face “cognitive limitations”. Managers in businesses and corporations often make decisions based on their objective interpretations on specific events. For example, being overconfident in short-term accomplishments encourages managers to make risky decisions without carefully considering all factors. The truth is, managers tend to implement decisions that correlate with their value and experiences, often ignoring facts that contradict them.

Anchoring Bias

Bias is not revealed in business owners, it has also been shown in consumers; the anchoring bias is not rare to see in this setting. In public markets, items are often purposely priced for consumers to experience the anchoring bias. For example, if you see a T-shirt that is $1,000 first, then see a second one that is $100, you’re prone to think the second one is cheap—although it’s probably way less than its worth—thus more prone to purchasing it (Vipond, 2023). It is important for buyers to be conscious of their purchases when considering its intrinsic value (true or fundamental value of the item instead of its current market value).

How to Avoid Bias?

Completely avoiding bias is difficult, most likely even impossible. But there are many ways you can minimize bias in your decisions to help you view situations clearer. Since bias and heuristics are systematic errors and shortcuts in your brain, critical thinking—the ability to analyze with discipline, interpret, and judge with intellect—will be your best way to avoid bias. Recognizing the different factors, views, and even counterarguments to a situation will encourage a more systematic and organized thinking process. Say you’re about to purchase the $100 shirt mentioned in the last paragraph because you believe it is cheap. But before you purchase it, think about this: Is the shirt itself worth this price? Do I really need this shirt? How much does my other shirt cost? Practicing self-awareness and setting realistic expectations will lead to your truest thoughts, ultimately preventing overconsumption of products.

Until now, I have only mentioned the bias we have in our decision making. This may not seem like a big deal, for people like me, “typical” students or adults; after all, we’re not million-dollar corporate owners that make million dollar involved decisions. But this is not true, bias is everywhere, it’s in schools and workplaces, and our daily actions. It’s the underlying cause for inequality, prejudice, poor decisions, misunderstandings, and so much more. We must continuously educate ourselves to make our decision not necessarily right, but true.


References

Amanda D. Angie, Shane Connelly, Ethan P. Waples & Vykinta Kligyte (2011) The influence of discrete emotions on judgement and decision-making: A meta-analytic review, Cognition & Emotion, 25:8, 1393-1422, https://www.tandfonline.com/doi/abs/10.1080/02699931.2010.550751

Chiara Acciarini, Federica Brunetta, Paolo Boccardelli; Cognitive biases and decision-making strategies in times of change: a systematic literature review. Management Decision 4 May 2021; 59 (3): 638–652. https://doi.org/10.1108/MD-07-2019-1006

Corporate Finance Institute. (2023, September 29). Anchoring bias. Corporate Finance Institute. https://corporatefinanceinstitute.com/resources/career-map/sell-side/capital-markets/anchoring-bias/ 

Hayes, A. (n.d.). What is overconfidence bias? Can it harm your investment returns?. Investopedia. https://www.investopedia.com/overconfidence-bias-7485796 

Michael, B., Kellett, S., & Delgadillo, J. (2023). Is clinical decision making in stepped-care psychological services influenced by heuristics and biases? Behavioural and Cognitive Psychotherapy, 51(4), 362–373. https://www.cambridge.org/core/journals/behavioural-and-cognitive-psychotherapy/article/abs/is-clinical-decision-making-in-steppedcare-psychological-services-influenced-by-heuristics-and-biases/D8C4D09DB2403BD38ED6FD8D5631EFF4

Pilat D., & Sekoul K. (2021). Anchoring Bias. The Decision Lab. Retrieved August 3, 2025, from https://thedecisionlab.com/biases/anchoring-bias

Ruhl, C. (2023, October 24). What is cognitive bias? types & examples. Simply Psychology. https://www.simplypsychology.org/cognitive-bias.html 

Comments

Academic Memories
Email: info@academicmemories.com

Instagram: @academic.memories

TikTok: @academicmemories

bottom of page