Showing posts with label MBA lessons. Show all posts
Showing posts with label MBA lessons. Show all posts

Thursday, September 30, 2010

Bias

I just wrote a paper for my OB class on the psychological biases that contributed to the sub-prime mortgage crisis in the US. (Wow, sounds fancy when I put it that way.) No, I'm not going to paste my paper here. But reading up for it got me thinking about how we all harbor biases without consciously realizing it.

Off the top of my head, the biases I acted out this past week -

Availability bias, where we only consider available information:
For a global market research project, I needed specific information and spent hours googling and browsing the company library website for data on different countries. I only found information for one country so I told my manager I was going to make that a sample case and extrapolate for neighboring countries. A colleague overheard me, and asked if I'd thought of calling up the library researchers. I hadn't (I was new to research projects). I dropped them a line and a day later I had a comprehensive and exhaustive database of information from them. I just needed to ask the experts.

Confirmation bias, where we tend to favor information that confirms our preconceptions:
Extreme celebrity worship (think fasting, self-immolation, sacrifices, building dedicated temples) is a common practice in India. It has been a sore point with me ever since I can remember because I've never looked up to any screen personality and cannot fathom how anyone else can practice such extreme adulation. I have steadfastly refused to watch any movie starring one of India's biggest superstars simply because I don't care for the craze. I smirked when I heard that in his latest movie he (at the age of 60+) is paired with a gorgeous young actress. I sighed when I read that fans were planning to 'bathe' the movie reel and posters in 100s of gallons of milk.  'Crazy', I muttered.Some of my friends implored me to watch the first show with them to understand the mania, but I refused.
Why? How can I be so judgmental when I don't know anything about the actor, his acting, his attitude towards the crowd mania for him...anything at all? Just from what I selectively read/heard about him? That, I realized today is confirmation bias. Perhaps I should go watch that movie after all.

Overconfidence/Optimism Bias:
I was given a new project yesterday. My manager's boss wanted an estimate of when I would have something for initial review and I told my manager "COB Friday". It was Wednesday morning and my manager looked at me in surprise and asked whether it wasn't too short a timeline. I said I knew where to find the market data so I just needed to get some data from engineering. My manager pointed out that I'd need to export and process the market information and that I may not get prompt responses from engineering. I then changed my response to COB Monday. Looking back, I've done this more than once before, only I didn't know it was a habit with me until now.

Social proofing (herding effect), where we accept something because others like us approve of it :
So after last Saturday's class, I told my carpool on the ride home that I was going to start working on the homework the next day. Two of them immediately pooh-poohed the idea and said they were giving themselves free Sundays. Guess what, I followed them. (And lived to regret it, but that's another post.)

Baby Bias, where you trust and like someone because they have a cute baby:
Neighbors who I had walked past without acknowledging for the past many months recently popped out an angelic baby and suddenly I feel like they're family. I smile broadly when we meet in the elevator, we discuss my work and their lives as I gush over the baby and I actually time myself to work hoping I'll run into them.

Okay, I made that last one up. But I'm sure it falls under some category of social bias!