Perceptual or Decision-Making

Biases in how people think can be huge roadblocks in any decision-making process.

Biases affect and interrupt unbiased consideration of a problem by bringing factors into the

decision-making processes independent of the decision. Decisions are frequently measured

against a set of requirements and enhanced by personal preferences from a psychological point of

view. Confirmation, anchoring, and ambiguity are the most common biases I use.

Confirmation bias occurs when a person seeks and processes data (such as news reports,

statistical data, or the views of others) that supports an existing premise or belief. Allowing

oneself to be mistaken is one way to reduce the effect of this bias. Check all of the information

before deciding on a critical topic. Individuals have all received misleading information that we

sincerely believed at a certain point in our lives (masterclass, 2020).

When customers fixate on a particular component of a product or service to exclude all

other factors, this is known as the anchoring effect. Price is often the essential aspect of a

customer's decision-making process, which is understandable. This is when you heavily depend

on a single piece of knowledge or experience to make additional decisions. Following the

establishment of an anchor, future judgments are made by shifting away from that anchor,

limiting one's ability to interpret new, possibly necessary details accurately. Reduce the impact

of this prejudice by enhancing your knowledge through study, developing logical reasoning

abilities, and interacting with professionals and coworkers (Sarkis, 2019). Checklists and other

measures can also help reduce anchoring bias.

The ambiguity effect could be a strategy to reject choices we believe we lack adequate

information. Individuals with higher levels of ambiguity avoidance are also more prone to
exhibit this behaviour. Many customers, whether they recognize it or not, are affected by the

ambiguity effect, a cognitive bias initially described by Daniel Ellsberg in the early 1970s. This

cognitive bias is better described as preferring a choice with a predictable outcome over "taking a

chance" on a choice with uncertain odds. The ambiguity effect is directly related to behavioural

biases from a psychological perspective.

For instance, many investors prefer to put their money into safe assets like government

bonds since the anticipated return on investment is generally predictable due to bonds' solidity

and security as an investment scheme. The strategies for limiting the impact of this bias are to

take a playful, improvisatory attitude to decision-making (Heinitz, Lorenz, Schulze, &

Schorlemmer, 2018). Rather than immediately selecting the less ambiguous alternative, we must

recognize what we don't understand and acknowledge the possible benefits of selecting the more

confusing option.

References
Heinitz, K., Lorenz, T., Schulze, D., & Schorlemmer, J. (2018). Positive organizational behavior:

Longitudinal effects on subjective well-being. PloS one, 13(6). Retrieved from

https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0198588

masterclass. (2020, November 8). How to Identify Confirmation Bias: 3 Ways to Reduce Bias.

Retrieved from masterclass: https://www.masterclass.com/articles/how-to-identify-

confirmation-bias#what-is-confirmation-bias

Sarkis, S. (2019, May 31). Anchoring Bias Can Weigh You Down And Make You Settle For Less.

Retrieved from forbes:

https://www.forbes.com/sites/stephaniesarkis/2019/05/31/anchoring-bias-can-weigh-you-

down-and-make-you-settle-for-less/?sh=1e628129396b