20 significant mental errors (you don’t know you’re making): | by Sahil Bloom

Sahil Bloom

@SahilBloom

about 1 month ago

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20 significant mental errors (you don’t know you’re making):

The Curse of Knowledge Experts—and intelligent people more broadly—make the flawed assumption that others have the same background and knowledge on a topic as they do. It makes them unable to teach or lead in an effective manner for those still coming up the learning curve.

Heaven’s Reward Fallacy We tend to have an expectation that we will be be justly rewarded and praised for all of our hard work and sacrifice. The reality is that a lot of it goes unnoticed—it's thankless. The pursuit of external affirmation just breeds resentment.

Survivorship Bias History is written by the victors. Studying and learning from "survivors”—while systematically ignoring "casualties”—creates massive distortions in our conclusions. We overestimate the odds of success because we only read about successes!

Fundamental Attribution Error We tend to: (1) Attribute someone else's actions to their character—and not to their situation or context. (2) Attribute our actions to our situation and context—and not to our character. We cut ourselves a break, but hold others accountable.

Spotlight Effect We overestimate the degree to which other people are noticing or observing our appearance or actions. This keeps people from being themselves due to an irrational fear of judgement. It's liberating to realize that most people don't really care about you…

Entrenchment Effect We have a damning tendency to use evidence in direct conflict with our position to further strengthen our belief in that position. We dig in our heels and form a greater attachment to the idea. We value being right over getting to the truth.

Availability Bias We evaluate situations based on the most readily available data. This tends to be the data that can be quickly recalled from our memory. This is how the news cycle impacts our thinking. Its persistent negativity cements a belief that the world is dark.

Loss Aversion We tend to prefer avoiding losses vs. achieving gains. The pain of losing something is more powerful than the pleasure of winning it. We will typically do more to avoid losses than we will to seek gains. We systematically overvalue what we already have.

Naïve Realism We generally think very highly of ourselves. We tend to believe that we see the world with perfect objectivity. We also assume that people who disagree with us must be ignorant, uninformed, or biased. This error sits at the core of many societal problems.

Groupthink An all-too-common psychological phenomenon in which people strive for consensus and conformity within a group. We set aside our own beliefs or principles to adopt those of the group and appease the whole. Opposition is silent and decision-making falters.

The Dunning-Kruger Effect We are notoriously incapable of objective evaluation of our own competency levels. People with a low ability at a task are prone to systematically overestimate their ability at that task. Remember: Everyone is a genius in a bull market!

Bandwagon Effect We are a social species—this allowed us to thrive. It also creates a strong tendency to do things simply because a lot of other people are doing the same. "Everyone believes X, so obviously X is true." Our desire for conformity hinders our decision-making.

Ad Hominem Latin phrase for "to the person”—an attack of the individual rather than the argument. Instead of addressing the argument and its merits, we attempt to refute the opposition on the basis of personal characteristics. All-too-common in political—or Twitter—debates.

Baader-Meinhof Phenomenon New awareness of something creates an illusion that it's appearing more frequently. We constantly notice what is top of mind. Ever notice that something you just recently observed seems to pop up everywhere? Like seeing 11:11 on your phone clock...

Personal Incredulity We cannot personally understand or believe something, so we argue that it simply cannot be true. Complex topics require significant upfront work to understand. An inability to immediately understand cannot be used to argue the illegitimacy of a claim.

Sunk Cost Fallacy Sunk costs are economic costs already invested in an activity that cannot be recovered. We tend to think we should continue with something on the basis of all that we've put in—with no regard for future costs or the likelihood of ultimate success.

The IKEA Effect We ascribe significantly more value to objects that we have created or assembled, irrespective of the final quality of the object. We infuse our own self worth into the object, thereby increasing its value in our minds. IKEA thrives on this basis!

Confirmation Bias We have a tendency to see and interpret information in a manner that supports previously held beliefs. New data positive? This idea is a winner. New data negative? Must have been an error in the experiment. Very common and very dangerous.

Post Hoc Ergo Propter Hoc A common but broken argument framework: • Event B followed Event A. • Event B was caused by Event A. Just because B followed A, doesn’t necessarily mean that B was caused by A. Correlation ≠ Causation.

The Gambler's Fallacy We are naturally bad with probabilities. We have a tendency to believe that past events alter future outcomes—even when they clearly have no impact. Ever thought you were "due for a win" in roulette? You're a victim of the Gambler's Fallacy.

Those are 20 dangerous mental errors you don't know you're making. Follow me @SahilBloom for more threads on decision-making, business, and finance. I write deep-dives on these topics in my newsletter. Join 125,000+ others and subscribe! t.co/32basvHOHZ

By the way, we all make these errors—none of us are immune. The goal is to become more aware of them and the impact they have on our decision-making and arguments. I’m thinking on ways to deliver an email with one per week to actually build awareness through practice over time.

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