Competing Biases

Competing Biases

I am trying to remind myself that everyone, myself included, operates on a complex set of ideas, narratives, and beliefs that are sometimes coherent, but often conflicting. When I view my own beliefs, I am tempted to think of myself as rational and realistic. When I think of others who I disagree with, I am prone to viewing them in a simplistic frame that makes their arguments irrational and wrong. The reality is that all of our beliefs are less coherent and more complex than we typically think.

 

Daniel Kahneman’s book Thinking Fast and Slow has many examples of how complex and contradictory much of our thinking is, even if we don’t recognize it. One example is competing biases that manifest within us as individuals and can be seen in the organizations and larger groups that we form. We can be exaggeratedly optimistic and paralyzingly risk averse at the same time, and sometimes this tendency can actually be a good thing for us. “Exaggerated optimism protects individuals and organizations from the paralyzing effects of loss aversion; loss aversion protects them from the follies of overconfident optimism.”

 

On a first read, I would expect the outcome of what Kahneman describes to be gridlock. The optimist (or optimistic part of our brain) wants to push forward with a big new idea and plan. Meanwhile, loss aversion halts any decision making and prevents new ideas from taking root. The reality, as I think Kahneman would explain, is less of a conscious and deliberate gridlock, but an unnoticed trend toward certain decisions. The optimism wins out in an enthusiastic way when we see a safe bet or when a company sees an opportunity to capture rents. The loss aversion wins out when the bet isn’t safe enough, and when we want to hoard what we already have. We don’t even realize when we are making these decisions, they are just obvious and clear directions, but the reality is that we are constantly being jostled between exaggerated optimism and loss aversion.

 

Kahneman shows that these two biases are not exclusionary even though they may be conflicting. We can act on both biases at the same time, we are not exclusively a risk seeking optimists or exclusively risk averse. When the situation calls for it, we apply the appropriate frame at an intuitive level. Kahneman’s quote above shows that this can be advantageous for us, but throughout the book he also shows us how biases in certain directions and situation can be costly for us overtime as well.

 

We like simple and coherent narratives. We like thinking that we are one thing or another, that other people are either good or bad and right or wrong. The reality, however, is that we contain multitudes within us, act on competing and conflicting biases, and have more nuance and incongruency in our lives than we realize. This isn’t necessarily a bad thing. We can all still survive and prosper despite the complexity and incoherent beliefs that we hold. Nevertheless, I think it is important that we acknowledge the reality we live within, rather than simply believing the simple stories that we like to tell ourselves.
Overcoming Group Overconfidence

Overcoming Group Overconfidence

Overcoming group overconfidence is hard, but in Thinking Fast and Slow, Daniel Kahneman offers one partial remedy: a premortem. As opposed to a postmortem, and analysis of why a project failed, a premortem looks at why a program might fail before it has started.

 

Group communication is difficult. When the leader of a group is enthusiastic about an idea, it is hard to disagree with them. If you are a junior member of a team, it can be uncomfortable, and potentially even disadvantageous for you and your career to doubt the ideas that a senior leader is excited about. If you have concerns, it is not likely that you will bring them up, especially in a group meeting with other seemingly enthusiastic team members surrounding you.

 

Beyond the silencing of a member who has concerns but doesn’t want to speak up is another problem that contributes to overconfidence among teams: groupthink. Particularly among groups that lack diversity, groupthink can crush the planning stage of a project. When everyone has similar backgrounds, similar experiences, and similar styles of thinking, it is unlikely that anyone within the group will have a viewpoint or opinion that is significantly different than the prevailing wisdom of the rest. What seems like a good idea or the correct decision to one person probably feels like the correct idea or decision to everyone else – there is literally no one in the room who has any doubts or alternative perspectives.

 

Premortems help get beyond groupthink and the fear of speaking up against a powerful and enthusiastic leader. The idea is to brainstorm all the possible ways that a project might fail. It includes an element of creativity by asking everyone to imagine the project is finally finished, either successfully but well over budget, way late, after a very turbulent series of events, or the project was a complete failure and never reached its intended end point. People have to describe the issues that came up and why the project did not reach the rosy outcome everyone initially pictured. Imaging that these failures had taken place in real life gets people to step beyond groupthink and encourages highlighting roadblocks that particularly enthusiastic members overlook.

 

Because premortems are hypothetical, it gives people a chance to speak up about failure points and weaknesses in plans and ideas without appearing to criticize the person the idea came from. It creates a safe space for imagining barriers and obstacles that need to be overcome to achieve success. It reduces groupthink by encouraging a creative flow of ideas of failure points. As Kahneman writes, “The main virtue of the premortem is that it legitimizes doubts. Furthermore, it encourages even supporters of the decision to search for possible threats that they had not considered earlier.”

 

Overcoming group overconfidence is possible, but it needs the right systems and structures to happen. Groupthink and fear are likely to prevent people from bringing up real doubts and threats, but a premortem allows those concerns to be aired and seriously considered. It helps get people to look beyond the picture of success they intuitively connect with, and it helps prevent enthusiastic supporters from getting carried away with their overconfidence.
Should You Be So Confident?

Should You Be So Confident?

Are you pretty confident that your diet is a healthy option for your? Are you confident in the outcome of your upcoming job interview? And how confident are you that you will have enough saved for retirement? Whatever your level of confidence, you might want to reconsider whether you should be as confident as you are, or whether you are just telling yourself a narrative that you like and that makes you feel comfortable with the decisions you have made.

 

In Thinking Fast and Slow, Daniel Kahneman writes the following about confidence:

 

“Confidence is a feeling, which reflects the coherence of the information and the cognitive ease of processing it. It is wise to take admissions of uncertainty seriously, but declarations of high confidence mainly tell you that an individual has constructed a coherent story in his mind, not necessarily that the story is true.”

 

We feel confident in our choices, decisions, and predictions about the future when we can construct a coherent narrative. When we have limited information and experience, it is easy for us to fit that information together in a simplified manner that creates a logical story. The more conflicting and complex information and knowledge we obtain, the more diverse experiences and viewpoints we adopt, the harder it is to construct a simple narrative, and the harder it is for our story about the world to align in a way that makes us confident about anything.

 

A high level of confidence doesn’t represent reality, and it may actually reflect a lack of understanding of reality and all of its complexities. We are confident that our diet is good when we cut out ice cream and cookies, but we don’t really know that we are getting sufficient nutrients for our bodies and our lifestyles. We don’t really know how we perform in a job interview, but if we left feeling that we really connected and remembered to say the things we prepared, then we might be confident that we will land the job. And if we have a good retirement savings program through our job and also contribute to an IRA, we might feel that we are doing enough for retirement and be confident that we will be able to retire at 65, but few of us really do the calculations to ensure we are contributing what we need, and none of us can predict what housing or stock markets will look like as we get closer to retirement. Confidence is necessary for us to function in the world without being paralyzed by fear and never-ending cycles of analysis, but we shouldn’t mistake confidence in ourselves or in other people for actual certainty and knowledge.
Overconfidence

Overconfidence

How much should you trust your intuitions? The answer to the question depends on your level of expertise with the area in which you have intuitions. If you cook with a certain pan on a stove every day, then you are probably pretty good with trusting your intuition for where the temperature should be set, how long the thing you are cooking will need, and where the hottest spots on the pan will be. If you are generally unfamiliar with cars, then you probably shouldn’t trust your intuition about whether or not a certain used car is the right car to purchase. In other words, you should trust your instincts in things you are deeply familiar with and in areas where you are an expert. In areas where you are not an expert and where you only have a handful of experiences, you should consider yourself to be overconfident if you think you have strong intuitions about the situation.

 

Daniel Kahneman demonstrates this with an example of a math problem in his book Thinking Fast and  Slow. Most of us don’t solve a lot of written math problems in our head on a daily basis. As a result, we shouldn’t trust the first intuitive answer that comes to mind when we see one. This is the case with the problem that Kahneman uses in his book. It is deliberately designed to have an intuitive easy answer that is incorrect. It helps us see how our overconfidence can feel justified, but still lead us astray.

 

Kahneman writes, “an observation that will be a recurrent theme of this book: many people are overconfident, prone to place too much faith in their intuitions. They apparently find cognitive effort at least mildly unpleasant and avoid it as much as possible.” Intuitions are easy. They come to mind quickly, and following them doesn’t take much conscious effort or thought. The problem, however, is that our intuitions can be wildly wrong. Sometimes they may help us reach an answer quickly, and if we are an expert they can even be life saving, but in many cases our intuitions can be problematic.  If we don’t ever think through our intuitions, we won’t actually realize how often we act on them, and how our overconfidence can lead to poor outcomes.

 

This doesn’t mean that we have to pull out a note pad and calculator every time we make a decision. Instead, it means we should pause momentarily to ask ourselves if our immediate intuition is justified. If we are driving down a freeway that we take every day, and our intuition says change lanes, we can pause for a beat and consider that we drive this way every day, and know that one lane or the other generally slows down a lot and that we will be better off in a different lane. If we have an intuition instead about a complex public policy, we can take a minute to consider whether we truly know anything about the public policy area, and whether we should be more critical of our intuitions. Jumping to conclusions in public policy based solely on intuition can be dangerous. It doesn’t take too much effort or time to think about whether our intuition can be trusted or whether we are overconfident, but it can have a big impact for how we relate to the world and whether we trust the voice in our own head, or the voice of experts.

More On Flattery

Yesterday I wrote about the distinction between true appreciation and real compliments to people’s hard work versus empty flattery. Today’s post continues on that theme. In his book How to Win Friends and Influence People, Dale Carnegie continues his thoughts on flattery writing, “That’s all flattery is – cheap praise. I once read a definition of flattery that may be worth repeating: Flattery is telling the other person precisely what he thinks about himself.”

 

I like thinking about this second quote from Carnegie on flattery. As someone who was a successful business person and leader,  Carnegie was subject to plenty of flattery. As you achieve more and become more successful people have more of an incentive to be on your good side. This means that flattery can have a bigger payoff for those individuals who want to gain something by being your friend or ally. You can become a target of flattery that makes you feel good, but potentially leaves you vulnerable to those who simply want something from you.

 

If we are someone who is vulnerable to flattery, we must remember Carnegie’s quote. Flattery is not honest feedback about who we are, about the quality of our decisions, or about our value to the organizations we are a part of. Flattery is about someone else who wants to gain something by allying themselves with us. That individual might want a promotion, might want more money, or might want more status by getting to tell others that they are part of our inner circle. The worst part is that since their flattery is insincere, it might make us overconfident about the decisions we have made, about our perspective on the future, and about our own self worth. Ultimately, this could lead us to make worse future decisions and to be overconfident and arrogant. Flattery in the end hurts the individual being flattered and the organizations they are a part of.

 

If we find ourselves to be the one dishing out the flattery, we should really reconsider what we are doing. Are we flattering another person because we feel that we can’t give them honest feedback and must flatter them? If so, we might want to find anther organization to be a part of, or we might want to band together with others to have a flattery intervention and agree to all quit flattering the person who does not deserve it. When we flatter someone else for our own gain, we are trading off long-term success and stability of something bigger than ourselves for our own personal short-term gain. This strategy might work well initially, but in the long run it will spell doom for ourselves and the organizations we are a part of.

 

Think deeply about honest feedback, and avoid flattery, because it will hurt us regardless of whether we are the giver or receiver.

Improvement and Self-Awareness

Self-awareness is something I have been trying to practice for several years and recently I have been thinking about it a little differently as I have recognized just how hard it is to be aware of ones actions, desires, and honest thoughts. Our lives are so busy that it is hard to look objectively at who we are and where were are. It is hard to honestly ask yourself what you are doing and working toward, what is really motivating you, and what you are afraid of. But this is a key skill to learn and something that is worth constantly thinking about.

 

In his book Ego is the Enemy, author Ryan Holiday returns to the idea of self-awareness as a tool to help overcome arrogance. We become overconfident in ourselves and our abilities when we lack self-awareness and do not talk honestly about our strengths and the areas that we still need to develop. It is easy and more comforting to think of ourselves as being incredibly awesome and possessing great skills and work ethic that everyone else should recognize. I frequently find myself wanting to fall into this type of thinking and often tell myself I am the best even thought I truly have not been active enough in my life to develop skills and practice some of the work that is necessary to succeed in the areas where I want my life to move. But I know, if I truly want to grow and make a valuable impact in the world, then I will need to stop telling myself how awesome I am, and instead take steps to engage with the world and apply my skills to develop new talents. Without self-awareness, the application of talents and the development of new skills is not truly possible.

 

In his book, Holiday writes, “One might say that the ability to evaluate one’s own ability is the most important skill of all. Without it, improvement is impossible.” If we don’t practice self-awareness and make a habit of evaluating our skills and abilities without embellishment, we risk putting ourselves in places where we cannot be successful and we are less likely to pull in the people we need to help us learn, grow, and reach our goals collectively. This might not be a big deal when we are just trying to run a 5k race or crush that new personal record in the weight room, but if we are trying to help our company make smart business decisions, land a big sale, or complete a report that is going to shed insight into the operating inefficiencies of an agency, we must pull in the right people and put our ego aside as we honestly evaluate our strengths and recognize the areas where we still need to grow or the areas where we can learn from those who have skills we would like to emulate. Overconfidence will doom our work and harm the larger organizations in which we operate, whereas self-awareness will help us be more effective and make a larger impact on the world with the help of those around us.