Twelve mental mistakes we make

I am quite enthralled by the study of the mind and our behaviors by Daniel Kahneman and Amos Tversky.  There are nearly two dozen mental mistakes described in the book by Daniel Kahneman.  I have identified twelve that have appealed most to me.

I am quite aware that in picking these twelve, I might have been subject to the availability bias!

1. Anchoring

During decision making, the first piece of information we perceive influences how we evaluate; even if the first piece of information is unrelated!

Example:  German judges with an average of more than fifteen years of experience on the bench first read a description of a woman who had been caught shoplifting, then rolled a pair of dice that were loaded so every roll resulted in either a 3 or a 9.

As soon as the dice came to a stop, the judges were asked whether they would sentence the woman to a term in prison greater or lesser, in months, than the number showing on the dice.

Finally, the judges were instructed to specify the exact prison sentence they would give to the shoplifter.

On average, those who had rolled a 9 said they would sentence her to 8 months; those who rolled a 3 said they would sentence her to 5 months; the anchoring effect was 50%

Caution:  The mind tends to anchor!

2. Framing

We react to a choice depending on how the information is presented (framed).

Example:  Silver medalists are disappointed that they did not get a gold; whereas bronze medalists are happier because they might not have received a medal at all.

Caution:  What is the frame within which you are responding?

3. Availability

If something can be recalled, the mind considers it more important than alternatives which are not as readily recalled.

Example:   While it is five times more likely that you will die of stomach cancer (which is already fairly rare) than be murdered, people judge themselves more likely to be murdered than getting stomach cancer, because homicides are so frequently reported in the news.

Caution:  Am I saying this just because I can easily recall it?

4. Base rate

If presented with generic, general information and specific information, the mind tends to ignore the former and focus on the latter.


Example:  Steve is a shy, introspective individual.  He is also methodical and organized.  Is Steve likely to be a farmer or a librarian?

One might be forgiven for answering the question by saying Steve is one or the other, and giving a seemingly sound reason for it.  However, it turns out that the description of Steve is misleading.  But the human mind which likes stories more than facts immediately gravitates to the description given of Steve being shy and organized.  Thus most of us answer the question based on the description of Steve ...

But the real answer is the following: The only meaningful information in that question is  'Steve.'  That is, Steve is male.  Using department of labor statistics, we can determine how many males are farmers and how many females are farmers.  As an illustration, let us say 80% of farmers are male and 80% of librarians are female.  Then regardless of personality, the probability answer is 'Steve is more likely a farmer than a librarian.'

This category of information (data) is called 'base rates.'  So for any question we first need to ask 'what is the base rate' and only then answer a predictive question

Caution:  Stories are not statistically valid for predictions. 

5. Counterfactual thinking

This was described in the last chapter of Michael Lewis' 2016 book, The Undoing Project.   Our human tendency is to create possible alternatives to life events that have already occurred; something that is contrary to what actually happened.

Example:  A driver who causes a minor car accident might think: “If only I had swerved sooner, I could have avoided the accident.” In contrast, the same driver could think: “If I had been driving faster, I might now be dead.”

Caution:  Why am I offering this counterfactual?

6. Duration neglect

Our judgment of the unpleasantness of painful experiences depend very little on the duration of those experiences.

Example:  Subjects placed their hands in cold water.  One group had to keep their hand in the water for an additional 30 seconds as the water was slowly heated to a warmer but still uncomfortably cold level, and under another set of instructions they were to remove their hand immediately.

Subjects chose to repeat the longer experience judging according to its worst and final moments, paying little attention to duration.

Caution:  Am I going by my 'last' impression?

7. Endowment effect

We ascribe more value to things when we own them.

Example:   Participants were given a mug and then offered the chance to sell it or trade it for an equally valued alternative -pens.

It was found that the amount participants required as compensation for the mug once their ownership of the mug had been established was approximately twice as high as the amount they were willing to pay to acquire the mug.

Caution:  Would I over-valuing my house if I were to sell just because I own it?

8. Halo effect

Overall impression of a person, company, brand, or product influences the observer's feelings and thoughts about that entity's character or properties.

Example:   The sandwich store, Subway's brand image as a "healthy" variety of fast food causes consumers to underestimate the caloric content of its dishes.

Caution:  Am I being influenced by this person's halo?

9. Illusion of validity 

Overestimating our ability to interpret and predict accurately when data "tells" a coherent story.

Example: Kahneman conducted a test  to select candidates for military officer training.  He made formal predictions based on their judgment.

While he consistently failed to predicting a candidate's performance, and knew that he was failing, he remained optimistic in his ability to correctly predict future outcomes.

Caution:  Am I too confident in making this assessment?

10. Loss aversion 

Preference of avoiding losses to making equivalent gains.

Example:  Participants were given $50 at the start. Then they were asked to choose between one of the 2 options:

keep $30, or
gamble with a 50/50 chance of keeping or losing the whole $50.

Results? Participated acted in a risk-averse way (43% decided to gamble).

Then the experimenters changed the secure option. Now they asked participants to chose between:

losing $20, or
gambling with a 50/50 chance of keeping or losing the whole $50.

What happened when one of the options was framed as a loss?

The number of participants who decided to gamble grew to 61% (the difference between the 2 scenarios is statistically significant).

Caution:  Is my reaction due to loss aversion?

11. Mental accounting 

Tendency to separate money into separate accounts based on a variety of subjective criteria, like the source of the money and intent for each account.

Example:  A man buys an expensive membership in a tennis club. Right after he puts down the money, which is nonrefundable, he hurts his ankle.

He grits his teeth and continues to play through the pain — even though not playing would mean much less agony.

Playing is the only way to ensure that the tennis club membership remains in the man’s mental category of money well spent. To not play would be to write off the membership cost as a loss, which is more painful to the man than the agony of hobbling through games on an injured ankle.

Caution:  Am I worrying about sunk cost?

12. Regression to the mean 

If a measurement is extreme on its first measurement, it will tend to be closer to the average on its second measurement.  Conversely if it is extreme on its second measurement, it will tend to have been closer to the average on its first.

Example:  The "Sports Illustrated Jinx".  The jinx states that a player or team featured on the cover of a sports magazine such as SI is likely to have a disappointing year the following season (or even a disappointing game the following week).

A player is only likely to make the cover once, and for some surprisingly good performance — something truly spectacular.  The jinx will be in effect since the athlete will begin regressing to the mean.

Caution:  If someone in a team performs really well, the question might not be what next, but rather who next!

Summary

Since these are mistakes of 'System 1' as Kahneman puts it, it is rather difficult to combat and rectify these mental errors.

But one hopes that understanding these and paying attention to them in a  systematic and habituated manner could offer the occasional remedy to the mental mistakes we are bound to make.