Wednesday, June 18, 2008

don't be bob bias

Meet Bob Bias. Bob is an insufferable know-it-all (no wonder, he assumes the worst about everyone) and truly believes that if he wills it, it will be done. He's statistically-incompetent, his memory is pretty bad, and yet he still thinks he is always right.

Unfortunately, we all have a little more Bob in us than we would like.

Bob, along with the rest of us, is simply a human being trying to find his way within an infinite flux of particles and processes with a human mind that is finite and cannot comprehend the infinite. Bob has to comprehend reality though thinking about simplified models of reality. For instance, Bob thinks of the infinite number referred to as Pi as 3.14 or as "Pi" as we can't really comprehend or describe its infiniteness.

These models work very well for most of our tasks. My mental representation of toothpaste is unbelievably superficial, but it captures the value that is important to me.

Our comprehension, however, isn't infinite, and it runs into some trouble in different areas. I've been checking out the cognitive bias work of Max Bazerman and incorporated his different biases into different traps that sabotage our decision-making.

General traps
Seen-it-all trap
Bob thinks his perception of a variable or process captures it in its entirety
Result: Bob thinks that his odds of winning a dice game have fundamentally changed since he has been "hot" recently

Never-wrong trap
Bob thinks that all of his simple finite models are accurate representations
Result: Bob plays a dumb bet in the stock market based on a superficial analysis

All-powerful trap
Bob thinks that every process or variable can be controlled by his action
Result: When Bob rolls a pair of dice, he throws harder when he's going for high numbers, softer when he wants low numbers

Dealing with data
The human mind is good at registering extremes. You remember the feeling of fire burning your skin. This ability hurts our ability to compute large amounts of data. We aren't good at abstraction, dealing with big numbers. We have a hard time comprehending probabilities. We're also oversensitive to causal relationships; we see causes everywhere, from lucky hats to less ridiculous, but no more causal variables

Descriptive-recall trap
Bob's ability to recall events and people is based on the vividness and recentness of the memory rather than their frequency
Result: Bob is more afraid of dying in a plane crash than a car crash or of heart failure

Rain-dance trap
Bob is very bad at differentiating between correlation and causation
Result: Bob believes his team won the game because he wore his lucky hat

Big-number trap
Bob is very bad at measuring statistically significant relationships and dealing with probabilities
Result 1: Bob estimates his travel time based on his last trip which was exceptionally quick, rather than his last 30 trips
Result 2: Bob thinks that three events with a 80% each of occurring are more likely to ALL occur than one event with a 25% chance

This should come as no surprise. The mind has a lot of information that has been validated internally, and it shouldn't be surprising that it tends to trump all else. I think of it this way; the signals from the self, the feelings, the motivations, etc. create a dynamic digital signal to the brain of what Bob enjoys, didn't enjoy, etc. Bob's mind has a hard time testing the voracity of what it thinks. This is common sense, it's hard to objective about what you think. As I said before, this leads to the never-wrong trap, but is also has added negatives when dealing with others.

What-about-me trap
Bob's brain registers the pain and pleasure of friends and others, but only through a relatively weak analog signal. This weak analog signal has to stack up against the dynamic digital input from Bob's mind, the same mind now tasked with measuring the value of Bob's digital signal v. the outsider analog input. The dice are clearly loaded.

Result 1: Bob thinks his cup is worth more than he would if it were not his cup
Result 2: Bob thinks that he cut off the guy because he had to, while that OTHER car cut him off because the driver is a jerk
Result 3: Bob hears that a person was killed in the town over, but that news causes him less anxiety than his migraine.
Result 4: Bob dismisses Frank because he sees that he is biased, but doesn't think about his own biases

This isn't an exhaustive list. Bryan Caplan has come up with a list of biases relevant to voters - "anti-market, anti-foreign, pessimism, and make-work" - but it's a good place to start.

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