Are You Biased? – Part 2
Please read Part 1 first to give you a background to this post. This series is my attempt to look at important cognitive biases that prevent us from taking optimal decisions in life, career and investing.
Image credit: andertoons.com
Our bias to conquer today is the Confirmation Bias. As an investor or as an employee, we have all fallen victim to this at one time or another, or if you are like me, repeatedly!
We all like consistency in our life. It simplifies our thinking and gives us a routine to follow. While habitual consistency is our brain’s ‘low energy’ way to get through our daily life, you pay a heavy price for it when it comes to important decisions. Confirmation Bias is our innate urge to look for those things that confirm your pre-conceived ideas/notions/decisions and ignore other things that raise red flags. This bias dulls key facts that go against ideas and conclusions that we hold dear.
Raman Venkatesh is the founder of Ten Factorial Rocks. Raman is a ‘Gen X’ corporate executive in his mid 40’s. In addition to having a Ph.D. in engineering, he has worked in almost all continents of the world. Ten Factorial Rocks (TFR) was created to chronicle his journey towards retirement while sharing his views on the absurdities and pitfalls along the way. The name was taken from the mathematical function 10! (ten factorial) which is equal to 10 x 9 x 8 x 7 x 6 x 5 x 4 x 3 x 2 x 1 = 3,628,800.