cognitive biases


Friends of the Behavioral Economics Blog, this week we present the paper “The longitudinal interplay between attention bias and interpretation bias in social anxiety in adolescents”, by Henricks, L. A.; Lange, W. G.; Luijten, M.; van den Berg, Y. H. M.; Stoltz, S. E. M. J.; Cillessen, A. H. N. and Becker, E. S. (2022), in which authors carry out a study to know whether the attention bias and the interpretation bias are related to social anxiety in teenagers, and if so, how. 

Social anxiety is closely related to the fear of being negatively evaluated by others and is often accompanied by avoidance of social situations. This type of anxiety has its onset in childhood, but symptoms increase during adolescence.

Young sufferers experience serious socioemotional consequences, such as an increased risk of peer victimization, depression and even substance abuse. Therefore, early detection and treatment are extremely important, highlighting the need to devote efforts and resources to research into the factors that contribute to the onset and maintenance of social anxiety. 

Many cognitive models assume that biased cognitive processing is a very influential factor. Especially, negative attention bias (that is, the tendency to pay more attention to negative stimuli) and negative interpretation bias (the tendency to negatively interpret ambiguous social situations) would increase the risk of experiencing social anxiety symptoms in children and adolescents. 

One of the existing studies showed that adolescents with a negative interpretation style are at increased risk for social anxiety. However, longitudinal evidence on the role of negative attention bias and negative interpretation bias is still lacking. 

At the same time, most studies in young population investigated the effects of these biases on social anxiety ignoring the fact that both may be related or interact with each other. 

To overcome these limitations, the study in the article focuses on the interaction between attention bias and interpretation bias, and examines the longitudinal predictive ability of cognitive biases on social anxiety in adolescence. 

Adolescence is a period that may be critical for the development of cognitive biases as a result of sociocognitive maturation. Adolescents, at this stage of life, become able to think and reason abstractly and develop metacognitive beliefs.

In some previous studies it was seen that negative interpretation bias is apparently related to an increased risk of experiencing anxiety symptoms, including social anxiety. 

On the other hand, attention bias is a complex phenomenon consisting of multiple components. For example, it is characterized by increased engagement with threat, as socially fearful individuals are quicker to detect negative stimuli in an environment. It is important to understand this point because of the multifactorial nature of these biases. 

In this study, the aim was to examine both attentional and interpretation biases and their components, all through a visual search task in which participants had to detect or ignore a social threat. 

The combined bias hypothesis is also considered, as the authors believe it possible that attentional bias and interpretation bias are related and influence each other. 

For this purpose, data from 2017, 2018, and 2019 were gathered. A total of 816 young people from different grades of secondary education, in the context of the Netherlands, participated. 

A visual search task was created with images of adolescent faces expressing different emotions. The participants had to point out those they found threatening and neutral. 

It seems that attentional bias is not as closely related to social anxiety as authors predicted. However, the greater the negative interpretation bias, the greater the tendency to suffer from social anxiety.

Future research could examine how these biases behave in stressful situations, to find out how they would influence young people’s behavior in borderline situations. 

In addition, it appears that there is also no consistent or solid relationship between the two biases. This may be because it does not really exist, or because there are methodological difficulties in measuring this relationship. 

In any case, the authors recommend improving the tasks focused on the study, especially, of the attention bias in adolescents; in addition to studying the role of the different cognitive processes and how they relate and interact with each other when it comes to predicting the tendency to suffer from social anxiety. 

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Friends of the Behavioral Economics Club, this week we present the paper “Cognitive Biases, Risk Perception, and Risky Driving Behaviour”, by Mairean, C.; Havârneanu, G. M.; Baric, D. and Havârneanu, C. (2022), in which authors carry out a study to know wether a couple of cognitive biases are related to risky driving behavior, and if it is so, how is that relationship. 

Risky driving behavior represents a threat to the driver but also to other road users. These behaviors are, for example: high speed, not respecting red lights or safe distances, not wearing seat belts or driving under the influence of drugs.

A significant number of studies suggest that the majority of traffic accidents are related to cognitive deteriorations and decreased driving performance caused by alcohol or other drugs. In fact, both the volume of alcohol in a particular drink and excessive drinking are associated with dangerous driving behavior.

Studies show that alcohol consumption can influence driver’s self-perception, and suggest that people may believe they are more capable to drive after drinking.

But what about when the driver hasn’t been drinking? According to other studies, an important determinant of judgment or risky driving is represented by cognitive biases related to the evaluation of personal driving skills, personal control and perceived vulnerability in traffic.

Two common types of biases are the optimism bias and the illusion of control.

Optimism bias was used to describe people’s tendency to believe they are less vulnerable to negative events compared to their peers.

Although the optimism bias can improve self-esteem and motivation, an increased sense of invulnerability can have harmful consequences, leading people to engage in risky behavior or not take appropriate precautionary measures.

The illusion of control, on the other hand, would represent two ideas: on the one hand, the belief that one can control the results to obtain what he wants through his personal abilities; on the other hand, that these skills are enough to prevent negative outcomes, when in fact they are not.

Like the optimism bias, the illusion of control has been linked to risk behaviors, particularly in the area of ​​health and gambling. In road safety, it has been shown that it is related to risky driving.

It should be mentioned that different theoretical models affirm that the decision to carry out risky driving behaviors is made through the evaluation of risks and benefits.

The central aim of the study was to investigate the relationship of optimism bias and illusion of control with risky driving behavior in a sample of Romanian drivers, since Romania is the context of the study.

In Romania, every year, more than 9,000 people are seriously injured after traffic accidents. Furthermore, the Romanian context is of particular importance, given that Romania is a country with a significant history of weak road safety within the European Union.

A total of 366 drivers participated, approximately half were men and the other half were women. Optimism bias, illusion of control, and risk perception, as well as driving behavior, were measured.

The results revealed that optimism bias was negatively correlated with risky driving behaviors, while the illusion of control was positively correlated.

This contradicted the initial expectations of the authors. It appears that drivers’ belief that they are less vulnerable to negative traffic events does not condition them to engage in reckless driving behavior.

Taking previous literature as a reference, in addition to the results of the present study, it seems that the optimism bias can motivate drivers to take greater risks because they would feel less vulnerable; however, and this is the important point, this may not be true when drivers perceive that the causes of a possible accident are beyond their control and responsibility.

On the other hand, it seems that a high illusion of control is related to a high tendency to carry out risky behaviors when driving. Risk perception mediated the relationship between the illusion of control and risk behavior. That is, when the participants presented a high level of the illusion of control, they were more likely to perceive low risk in different traffic situations, which leads to a greater tendency to engage in risky behaviors.

Authors consider that these results inform professionals working in road safety that, in order to reduce cognitive risks, we must also reduce the perception of risk. In addition, they provide valuable information that individuals can use to prevent irresponsible behavior on the road.

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Friends of the Behavioral Economics Club, this week we present the paper “Can We Do Better Next Time? Italians’ response to the Covid-19 emergency through a Heuristics and Biases Lens” by Misuraca, R.; Teuscher, U.; Scaffidi Abbate, C.; Ceresia, F.; Roccella, M.; Parisi, L.; Vetri, L. and Micheli, S. (2021), in which authors talk about the different cognitive biases and heuristics that could affect Italians during the worst waves of Covid-19 in 2020 and 2021. 

In January 2020, the Italian media informed the country of the spread of a mysterious and dangerous virus that originated in China. Within weeks of this declaration, the disease spread outside of China, causing thousands of deaths.

Immediately after this was known, the response from politicians and experts was not exactly as expected: everywhere it was announced that Covid-19 was no more dangerous than a common seasonal flu, there was nothing to worry about.

The first months of the pandemic went like this, the information provided to citizens about the real danger of the disease and the level of control over the spread of the infection remained unclear and sometimes contradictory.

In addition, recommendations on the safety measures to be taken to prevent infection (such as washing hands, wearing masks, confinement or social distancing) were recommended and not recommended several times. For example, sometimes it was considered very important to wear a mask, practically mandatory, but other times it was believed to be useless.

This lack of clarity caused a high degree of uncertainty among the Italian population (which is the focus of the authors and this article), as well as a very important lack of trust towards the main sources of information. People simply did not know who or what to believe.

Research from behavioral economics to understand decision making has shown that to deal with uncertainty, individuals adopt cognitive strategies, or heuristics, in order to simplify the environment. Heuristics would therefore be mental shortcuts used by humans to make decisions more quickly when the information is complex or incomplete. Sometimes this produces good results. Other times, it leads to systematic errors, called cognitive biases.

What the authors intend in this article is to examine the main heuristics and cognitive biases that could explain some of the most frequent behaviors of Italians during the worst moments of the pandemic that also were problematic from the point of view of public health, such as going to crowded nightclubs and bars, refusing to wear a mask and, in general, respecting the necessary security measures to control the spread of the infection. Finally, they offer some solutions that they consider appropriate.

According to the availability heuristic, when the media and politicians announced the risk of a deadly disease spreading, Italians reacted with an erroneous underestimation of the danger. People today know that the objective of journalists is not only to provide information, but to win the largest number of readers and viewers, which is often achieved by playing on the emotions of the public. In other words, Italians are used to the media sensationalizing events and therefore do not trust them. The same happens with politicians, since the population tends to consider that they are guided by their personal interests.

As a result, citizens underestimated and even ignored the political recommendations on the containment of Covid-19.

Another relevant idea is the confirmation bias, which is the general tendency to attribute greater importance to information that confirms our hypotheses, instead of contradicting them. During the Covid-19 outbreak, people might have mistakenly focused their attention on information that confirmed what they already believed (that the disease was flu-like, that journalists spread panic and anxiety out of professional interest…), instead of considering the new evidence that supported different conclusions.

Related to this confirmation bias is the ostrich effect, which refers to the tendency to ignore negative information by “burying one’s head in the sand” (although it has been confirmed that ostriches don’t do this, actually). That is, there would be a natural predisposition to avoid unpleasant situations and psychological discomfort, so that instead of facing the anxiety that accompanies all this, we prefer to ignore the problems. An example would be the Covid-19 deniers.

Heuristics and biases explain, based on what has been seen and previous literature, why many Italians acted as they did.

Given the spread of the virus and the growing death toll that continues two years after the start of the pandemic, it is crucial to help people think more rationally.

A first public health intervention to help people behave more logically is to teach them the particular way the human mind works, showing with practical examples how people’s thinking and behavior deviate from rationality. Increasing people’s awareness of the fact that their mind plays tricks on them in many ways is already a big step towards better decision making.

On the other hand, use could be made of the so-called “nudges”, the effectiveness of which has been demonstrated in previous literature. For example, it has been seen that in self-service cafeterias, if you change the position of fruits and vegetables so that they can be reached more easily, doing the opposite with unhealthy foods, it makes customers buy more of the first ones. Applying it to Covid, it would be a useful strategy to place masks and hand sanitizer in accessible public areas.

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Friends of the Behavioral Economics Club, this week we present the paper “Cognitive and human factors in legal layperson decision making: sources of bias in juror decision making”, by Curley, L. J.; Munro, J. and Dror, I. E. (2022), in which authors revise previous literature about the biases that influence the jury of a trial when they have to decide whether somebody is guilty or not. 

Jury members are lay people (that is, without knowledge of the law or relationship with it), who must listen to the evidence of the different cases to evaluate them and reach a verdict impartially and without prejudice.

This is so because defendants have the right of having a fair trial and any biased influence can undermine this right and the jury’s decision making.

Despite this, there is a great variety of biases that influence the members of the jury when it comes to reaching a verdict, understanding bias as a factor that generates a preference towards a certain result.

It is important to study the biases that influence the jury because if they make incorrect decisions they can lead to injustice. It would not be the first time that several jurors have acknowledged making decisions before hearing all the evidence, thus highlighting that bias can influence jury judgments.

Previous research has already discussed different factors that can influence the appearance of biases, for example, beliefs and attitudes prior to the trial or interpretations of the evidence that are already biased by expert witnesses.

One of the reasons why having a jury in a trial is recommended by some people, is because it is believed that in this way individual biases are counteracted. However, for this to happen, certain conditions must be met.

With a practical example it is much clearer: if half of the people on the jury believe that black people are more likely to commit crimes, the other half should believe that white people are more likely to commit crimes. With this we deduce that it is not so easy to produce that balance.

The objective of this article was, therefore, to evaluate the appearance of biases at different stages of the trial: before, during and after the presentation of evidence.

Some of the biases that can be found in the early stages of the trial are the propensity to conviction, an overconfidence in the system, cynicism towards the defense, a need for social justice, racial prejudice or the belief of an innate tendency to criminality.

There is also partiality, which can enter the courtroom because of prior publicity about the case. A few years ago, the media provided biased information only in very specific cases or when they were about famous people. However, with the advent of today’s technological advances, jurors may receive biased information from the vast majority of cases and, moreover, from many Internet sources, which makes it easier for this biased information to influence their judgment and their opinion.

On the other hand, “cognitive bias” appears, which is a hyperonym that can be used to describe the subjective perceptions of people that can influence the decisions they make and how they interact with the world. This occurs because the human being has a limited cognitive capacity and therefore seeks efficiency when making decisions, and on the other hand, because of personal experiences.

Previous research has also shown that the interaction between cognitive bias and characteristics of the defendant and victim can impact jury decision making. For example, ethnic minorities are more likely to receive guilty verdicts, due to how the media associates them with crime.

Authors propose to improve the testimony of expert witnesses with different strategies, in order to mitigate the effects of bias. For example, provide additional training to help experts communicate their testimony in a logical way that leaves no room for doubt, or hire independent experts who are not associated with either side of the process.

Another recommendation is for a team of psychologists to educate jurors and legal professionals about the impacts of bias and the contextual information that is irrelevant for their tasks in trials. For the members of the jury, authors propose a short video that could be shown to them before the trial.

Authors consider that, due to the importance of the consequences that can occur after a wrong decision by jurors, more research should be done on how they can protect themselves from the influence of bias.

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Friends of the Behavioral Economics Blog, this week we present the paper “The impact of cognitive biases on professionals’ decision-making: a review of four occupational areas” de Berthet, V. (2022), in which the author makes a revision of previous literature to know how cognitive biases affect professionals that have to make complicate decisions in different areas.

We have already seen in other articles how we can make mistakes when making decisions under the influence of cognitive biases, which can make us choose what is least beneficial to us.

For example, people tend to overestimate the accuracy of their judgments (overconfidence bias), or to perceive events as more predictable once they have already occurred (hindsight bias).

It’s not strange, then, that cognitive biases have attracted the attention of experts. While early research on cognitive biases was conducted with lay participants to study the general decision-making process, there seems to have been a great deal of interest in how biases spread to professional decision-making in areas such as management or administration, finance, medicine and justice.

For example, there is the framing effect, which tells us that when making risky decisions, people prefer safe gains over riskier ones. Therefore, framing a problem in terms of gains versus losses could have a significant impact on decision making.

In most trials, for example, plaintiffs must choose between a certain gain and a larger potential gain, while defendants choose between a certain loss and a larger potential loss. When considering settlement, judges who evaluate the case from the plaintiff’s perspective are more likely to recommend a settlement than those who evaluate the case from the defendant’s perspective.

For all this, the author carries out a review of the existing literature, to verify the approximate impact of cognitive biases in professional decision-making process in the previously mentioned areas. In addition, it establishes three main objectives.

The first is to decide if it is true that cognitive biases arise in professional decisions; the second, to evaluate the level of evidence shown in the analyzed studies; finally, identify if there are gaps in the research.

The author mentions some biases that should be explained, since they appear in most of the studies used for the analysis.

The first of these would be the anchoring bias, which would be the tendency to adjust our judgments to the first information obtained.

Next, we have the availability bias, which is a person’s tendency to assess the probability of events by the ease with which similar events that have already occurred come to mind.

Confirmation bias is the tendency to seek out, interpret, favor, and remember information that confirms and supports one’s personal beliefs.

Hindsight bias is the propensity to perceive events as more predictable once they have occurred.

The overconfidence bias is a common tendency for people to overestimate their own abilities.

Finally, we mention the framing susceptibility bias, which is the tendency for people to react differently to a decision depending on whether it is presented as a loss or a gain.

The analysis showed significant answers to the questions that the authors proposed at the beginning.

First, the reviewed literature shows that, in general, professionals in the four proposed areas (management, medicine, finance and justice) are vulnerable to cognitive biases.

In management, there is evidence that framing effects and overconfidence among CEOs impact decision-making.

In finance, there is strong evidence that overconfidence and the disposition effect (a consequence of loss aversion) impact the decision making of individual investors.

Regarding medical decision-making, the existence of omission bias, relative risk bias and availability bias is guaranteed, associating overconfidence, anchoring bias and availability bias with diagnostic errors.

Finally, anchoring biases, hindsight bias and confirmation bias, would be present in judicial decision-making.

The first step in controlling its influence is for practitioners to consider concrete and practical ways to reduce its impact.

Addressing limits, such as the need to consider individual differences to study bias, is something that, according to the authors, is necessary for further research on the topic.

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Friends of the Behavioral Economics Blog, this week we present the paper “How can biases affect entrepeneurial decision making? Toward a behavioral approach to unicorns”, by Abatecola, G.; Cristofaro, M.; Giannetti, F. and Kask, J. (2021), in which authors analyze what cognitive biases affect the decision-making process when it comes about unicorn companies.

How can cognitive biases influence the birth and evolution of entrepreneurial ventures?

Business research is increasingly focusing on analyzing decision-making in entrepreneurship. Commonly, these are decisions regarding opportunity recognition (discovering and recognizing potential opportunities), opportunity evaluation, and opportunity exploitation (it is said, for economic benefit).

Over time, it is a fact that business entrepreneurship decision making coincides with the survival, success or failure of the company.

Many experts have pointed out that entrepreneurs rely heavily on cognitive biases in their decision making. Biases would be the product of cognitive-emotional intertwining in decision making, and their appearance depends mainly on personal experience, the entrepreneur’s network of contacts and his/her capital.

However, the implications of many biases in business, how they interact, and the link to other factors are still unknown. In a nutshell, we still have a big puzzle in front of us.

This article aims to explain what entrepreneurial biases can appear when investors, company founders, and other important stakeholders make decisions that shape the birth and evolution of unicorn companies.

These are, simply put, startups whose very fast grow has provided them with a lot of capital. The aim would be to analyze what cognitive mechanisms impact their formation and growth.

Zhang and Cueto proposed in 2017 to advance in the study of biases in entrepreneurship. Specifically, consider that there were three types of bias to be aware of.

First, the “happy” biases. These tend to reduce the perception of risk and have both positive and negative effects on performance. They occur mainly due to the inexperience of the entrepreneurs, their young age, the environmental complexity, the risk of the contexts, etc.

Then the “incomplete attributes” biases appear. These lead people to pay attention to one attribute, even though there are others that are more relevant, tending to reduce the perception of risk. They occur mainly because of the network of contacts and the personal capital of entrepreneurs.

Lastly, “psychophysical” biases would appear. It refers to the variations in the human perception of certain attributes; however, it is a very little studied category.

Then, what would be the stages to study in the development of unicorn companies? Birth, transition and consolidation.

At birth, it is believed that “happy” biases would intervene. For example, when making a decision, people can recall the most vivid memories of a specific situation, this is called recall and is often intertwined with similarity (this would be an “incompleteness” bias). That is, there would be a tendency to evaluate more positively what is similar to oneself.

In the transition stage, decision makers often unconsciously seek only information that reinforces their emotionally charged point of view. That is, “happy” biases, while avoiding information that may contradict them.

Regarding the consolidation stage, the choice of decision makers is reinforced over time due to positive and circular feedback. This would increasingly lead them to discard information that does not reinforce this mechanism, which could cause a decision block.

Consequently, within consolidation, investors and founders can focus on continuing growth strategies. That is, both founders and investors tend to reinforce each other and escalate in commitment, legitimizing the unicorn company.

Authors consider that understanding the main cognitive mechanisms is the key to properly interpret the decision-making process in companies in general and unicorns in particular. Therefore, they hope that what is proposed in the article contributes to a better understanding of how these multimillion-dollar companies operate.

If you want to know more about Behavioral Economics and how to apply it to human behavior, take a look to our Certificate in Behavioral Economics, a formative program, in English or Spanish, 100% online and certified by Heritage University (USA). Now, with discounts for members of this club.

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