Notes and Takeaways from The 25 Cognitive Biases

When I read it: June 2023

Why I read it: I’ve been reading a lot about cognitive bias and mental heuristics lately. Here are my notes on 25 common biases from this book.

Go to the Amazon listing for the book or scroll down for my notes.

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My notes

We tend to overestimate our rationality.

We use mental shortcuts, or heuristics, to simplify situations to better understand and manage them quickly. This leads to cognitive biases that are useful most of the time, but that can sometimes mislead us.

Familiarizing yourself with these biases can help you recognize potential misuse.

Projection Bias

Projection bias refers to our tendency to project our current beliefs and preferences. We can project these preferences onto other people or our future selves. For example, we tend to make decisions for our future based on how we feel right now instead of how we might feel then. We assume our current needs will be our future needs. When you go to the store hungry, you tend to buy more food than you need.

(The term “projection bias” was coined by researchers George Loewenstein, Ted O’Donoghue, and Matthew Rabin.)

Hyperbolic Discounting

Hyperbolic discounting refers to our tendency to choose a more immediate smaller reward over a delayed larger reward. We don’t like to wait, so we tend to value temporal proximity, or how quickly we receive the reward, over the size of the reward. It’s called “hyperbolic” because the rate at which we tend to discount future rewards declines as temporal proximity declines.

Fundamental Attribution Error or Correspondence Bias

The fundamental attribution error refers to our tendency to attribute another's actions to their character and personality over situational and environmental factors. When evaluating others’ behavior, we tend to overemphasize a person’s character and underemphasize their circumstances. We assume what others do reflects who they are. We ignore the environmental triggers.

(Stanford professor Lee Ross coined the term “fundamental attribution error” in a 1977 paper, The Intuitive Psychologist And His Shortcomings: Distortions in the Attribution Process.)

Curse of Knowledge

The curse of knowledge refers to our tendency to assume that people we communicate with have the background knowledge to understand what we know. When we are experts in a particular field, we often use jargon and technical terms without realizing that others may not be familiar with them. This can make it difficult for us to explain things to others in a way they can understand.

Dunning-Kruger Effect

The Dunning-Kruger effect refers to our tendency to overestimate our competence in areas of low ability, expertise, or experience. On the flip side, high performers tend to underestimate their skills.

(The concept of the Dunning-Kruger effect is based on a 1999 paper by Cornell University psychologists David Dunning and Justin Kruger.)

Framing Effect

The framing effect refers to our tendency to draw different conclusions from the same information depending on how it’s presented. The mere ‘framing’ of a question influences the answer we provide. Studies have shown we prefer an option associated with a perceived positive outcome to the corresponding negative outcome. For example, in a 1988 study by Levin and Gaeth, participants preferred eating beef which was described as 75 percent lean, versus when it was described as having 25 percent fat. A competitor can attack a product that claims to have a 90 percent success rate as having a ten percent chance of failing.

Hindsight Bias

Hindsight bias refers to our tendency to perceive past events as more predictable than they were.

(The concept of hindsight bias has been indirectly described numerous times by historians, philosophers, and physicians.)

Identifiable Victim Effect

The identifiable victim effect refers to our tendency to offer greater aid to a specific, identifiable person, or "victim,” facing hardship than to a large group with the same need. Personal stories captivate us.

Sunk Cost Fallacy or Irrational Escalation

The sunk cost fallacy refers to our tendency to continue to invest money, time, or effort into a situation because we've already "sunk" so much into it. It’s difficult to walk away from a situation you’ve invested in because you don’t want to waste your investment.

Loss Aversion

Loss aversion refers to our tendency to give more weight to avoiding losses than receiving gains in decisions. The pain accompanying loss often outweighs the pleasure associated with gains.

Outcome Bias

Outcome bias refers to our tendency to assess the quality of a decision based on its outcome rather than considering how the decision was made at the moment. We tend to view decisions that lead to positive outcomes as good decisions and vice versa.

Overconfidence

Overconfidence refers to our tendency to overestimate our ability to perform tasks or to make accurate judgments.

Risk Compensation or Peltzman Effect

Risk compensation refers to our tendency to adjust our behavior based on perceived risk. We tend to become more careful when we sense greater risk and less careful when we feel safer.

“Peltzman effect” refers to Sam Peltzman’s classic 1975 study, “The Effects of Automobile Safety Regulation,” which reported that people believe they can afford to be reckless when following automobile safety laws.

Halo Effect

The halo effect refers to our tendency to allow our overall impression of a person to influence how we feel and think about their character.

Illusion of Asymmetric Insight

The illusion of asymmetric insight refers to our tendency to believe that we know ourselves better than other people know themselves.

Self-Serving Bias

Self-serving bias refers to our tendency to blame external forces when bad things happen and give ourselves credit when good things happen.

Illusion of Truth Effect or The Truth Effect

The illusion of truth effect refers to our tendency to believe false information to be true after repeated exposure. The more we are exposed to specific information, the more likely we are to believe it is valid without regard to supporting evidence. Repetition of a message affects our judgment. That’s why one of the most effective methods of persuasion is repetition.

Spotlight Effect

The spotlight effect refers to our tendency to believe we are being noticed by others more than we are. We feel we are under a constant spotlight. We overestimate the number of people paying attention to our actions. Although each of us is at the center of our world, we are not the center of everyone else's.

Survivorship Bias

Survivorship bias refers to our tendency to study survivors while overlooking learnings from those who didn't because of their lack of visibility. We are more interested in learning how something succeeded and “survived” than how something failed and “died”.

Availability Bias

Availability bias refers to our tendency to overestimate the importance of information that comes to our minds. We assume that if something can be recalled, it must be important, and we tend to think whatever can be recalled quickest and easiest is most important.

The Swimmer’s Body Illusion

The swimmer's body illusion refers to our tendency to confuse selection factors with results. We think we can get a “swimmer’s body” by training hard. But, most professional swimmers are born with certain physical characteristics, such as elongated arms, that become factors of selection in the swimming world. Advertisers often leverage this bias to make us believe we can achieve similar results as a naturally-gifted model.

Negativity Bias

The negativity bias refers to our tendency to place more importance on negative events than positive events of the same intensity. Something very positive tends to have less of an impact on us than something very negative. This is a part of our innate fight-or-flight response, which helped our ancestors survive in the wild.

Anchoring Effect

Anchoring bias refers to our tendency to over-rely on the first piece of information we receive. Initial information on a new subject becomes our “anchor” and acts as a reference point for any additional related information we receive.

Confirmation Bias

Confirmation bias refers to our tendency to search for, interpret, favor, and recall information in a way that supports our current beliefs or values. to search for and interpret things in a way that “ ”confirms” our own beliefs. We tend to favor information that complements our point of view and reject information that threatens it.

Bias Blind Spot

Bias blind spot referees to our tendency to recognize the impact of biases on the judgment of others while failing to see the impact of biases on our judgment.

Random quotes

• “The human understanding when it has once adopted an opinion (either as being the received opinion or as being agreeable to itself) draws all things else to support and agree with it.” —Francis Bacon

• "The death of one man is a tragedy, the death of millions is a statistic." —Unknown