The Mindset to Change Your Life’s Direction, w/ John Brontsema

My whole life was dedicated to baseball from an early time. People say, “Don’t put your identity,” or “You’re not a baseball player. That’s not your identity.” It really is though. While it’s not, it feels like it, because every decision I made, everything I was passionate about was baseball and achieving the next level.

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How to Overcome Cognitive Bias & Make Rational Decisions in Irrational Situations

Cognitive biases are flaws in our thinking that cause us to make inaccurate conclusions.

They can be harmful because they cause us to focus too much on some kinds of information while overlooking other kinds.

This is because people, like you and me, create their own “subjective reality” based on a myriad of factors.

Factors like: our past, our current emotions, and even our own perception of a given input.

Because a person’s construction of reality is usually what dictates behavior, improving the tools we use to perceive reality is the surest way to change our situation.

Why do cognitive biases even exist?

If you had to think about every possible option when making a decision, it would take a lot of time to make even the simplest choices throughout the day. 

Because of the sheer complexity of the world around us and the amount of information at all times, it is often necessary to rely on mental shortcuts that allow us to act quickly.

In fact, these are ingrained into our brains through evolution to help us survive.

If I’m walking alone in the jungle and I hear a strange noise getting closer and closer, my chance of survival increases if I just run away, instead of inspecting the noise to determine its source.

Every horror movie also reinforces this survival tactic.

These biases often work as rules of thumb that help you make sense of the world and reach decisions with relative speed.

Some of these biases are related to memory.

The way we remember an event is likely biased for a number of reasons, so it is very likely that this can lead to biased thinking and decision-making.

Other cognitive biases might be related to problems with attention.

Since attention is a limited resource, people have to be selective about what they pay attention to in the world around them.

Think back to the jungle example. Walking alone in a strange place would lead you to focus on safety and survival, so your decisions would be chosen through this lens.

Walking down the hallway of your office or school, you may be less worried about safety and survival and more worried about what people are thinking about your outfit or that dumb thing you said and wish you could take back.

We Are All Guilty of Bias

It is usually easier to spot in others but the truth is we are all guilty of them.

It is important to have the right tools to spot them because merely understanding their existence isn’t enough. 

You need to also ask yourself if they are hindering your own decision making.

Some telltale signs that you might be influenced by some type of cognitive bias include:

  • Only paying attention to news stories that confirm your opinions
  • Blaming outside factors when things don’t go your way
  • Attributing other people’s success to luck, but taking personal credit for your own accomplishments
  • Assuming that everyone else shares your opinions or beliefs
  • Learning a little about a topic and then assuming you know all there is to know about it

 

When you are making judgments and decisions about the world around you, you like to think that you are objective, logical, and capable of taking in and evaluating all the information that is available to you. 

Unfortunately, these biases sometimes trip us up, leading to poor decisions and bad judgments.

Cognitive Ignorance is Not Cognitive Bliss

But what we can do is understand that they exist.

And understand that when others seem to act irrationally around us, to them it seems rational based on all the factors we have already discussed.

Lastly, we also need to recognize that we are no different.

We do this too, and to others, we seem irrational.

 

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If you would like to learn more about Cognitive Biases and how to avoid letting them hurt your investment decisions, subscribe to my YouTube Channel.