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- Leading Greats #82
Leading Greats #82
Want to Make Better Decisions? Master Psychological Biases.
Ronnie Kinsey
October 13, 2024
Good decisions stem from self-awareness.
One of the biggest obstacles to wise choices is understanding the biases that skew our judgment.
These biases shape how we view situations and often lead us to act impulsively, overlooking long-term consequences.
Recognizing and balancing them enables brighter, more deliberate decisions.
Here are 21 Psychological Biases and tendencies -
Each with a Balance to help Manage them:
Reward & Punishment Bias:
We chase rewards or avoid punishments, neglecting long-term impact.
Balance:
Focus on long-term value over short-term wins.
+
Liking/Loving Bias:
We overvalue those we like, clouding judgment.
Balance:
Listen to those who challenge your thinking.
+
Disliking/Hating Bias:
We undervalue those we dislike, missing insights.
Balance:
Judge ideas based on merit, not personal feelings.
+
Doubt-Avoidance Bias:
We rush to certainty to escape discomfort.
Balance:
Embrace uncertainty; it leads to better outcomes.
+
Inconsistency-Avoidance Bias:
We resist changing our minds despite better information.
Balance:
Challenge your beliefs regularly.
+
Curiosity Bias:
We get distracted by interesting but irrelevant information.
Balance:
Stay curious but aligned with your goals.
+
Kantian Fairness Bias:
We prioritize fairness over practical outcomes.
Balance:
Balance fairness with long-term progress.
+
Envy/Jealousy Bias:
We act out of envy, chasing others' success.
Balance: Focus on your path.
+
Reciprocation Bias:
We feel pressure to return favors, clouding our judgment.
Balance:
Base decisions on merit, not obligation.
+
Influence from Mere Association Bias:
We judge based on associations, not values.
Balance:
Evaluate substance over reputation.
+
Pain-Avoiding Bias:
We avoid discomfort, stunting growth.
Balance:
Embrace discomfort as a path to improvement.
+
Excessive Self-Regard Bias:
We overestimate our abilities, leading to overconfidence.
Balance:
Seek continuous feedback and stay humble.
+
Overoptimism Bias:
We assume the best, downplaying risks.
Balance:
Plan for the best but prepare for the worst.
+
Deprival-Superreaction Bias:
We overreact to losses, leading to rash decisions.
Balance:
Focus on long-term goals over short-term setbacks.
+
Social Proof Bias:
We follow the crowd, assuming they're right.
Balance:
Think independently, trust your analysis.
+
Contrast-Misreaction Bias:
We judge based on comparisons instead of intrinsic value.
Balance:
Focus on absolute value, not relative comparisons.
+
Stress-Influence Bias:
Under stress, we make emotional decisions.
Balance:
Slow down and make decisions with a clear mind.
+
Availability Bias:
We rely on readily available information, even if incomplete.
Balance:
Dig deeper; the obvious answer isn't always the right one.
+
Use-It-Or-Lose-It Bias:
We rely on what we know, neglecting new learning.
Balance:
Embrace ongoing learning and adaptability.
+
Authority Bias:
We trust authority without question.
Balance:
Respect authority, but always do your due diligence.
+
Reason-Respecting Bias:
We justify decisions with weak reasons to feel validated.
Balance:
Ensure your reasons are backed by solid evidence.
Why These Biases Matter
These biases push us toward snap decisions and short-term thinking, distorting our view of risks and opportunities.
Beyond immediate choices, biases can have ripple effects:
First-order effects:
Immediate, often urgent outcomes.
Second-order effects:
Delayed consequences that surface later.
Third-order effects:
Long-term impacts that shape the future, for better or worse.
How to Benefit from This Awareness
Mastering these biases lets you think more clearly and make wiser choices.
Acknowledge biases, slow down when it counts, and always seek broader feedback.
Great leaders are aware of their blind spots and continuously work to see things clearly.
When you understand your biases, you make better choices—and those choices shape your life, your business, and your future.
This issue of Leading Greats was inspired by Charlie Munger (R.I.P.) - truly one of the Leading Greats of all time: a renowned investor and business partner of Warren Buffett.
This week, I was in downtown Los Angeles for a leadership event, and I spent time at Charlie Munger's law office.
It was quite moving to think of the influence that came out of those offices with their expertise.
I did a deep dive into Munger's decision-making beliefs and practices.
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