Biases

[walkinwood]

I am a big fan of scientists like Richard Thaler, Daniel Kahneman and the late Amos Tversky. Their research covers innate biases that we all have. This chart explains them in a concise way.

Enjoy.
20 cognitive biases that screw up your decisions | Business Insider

 

[ERD50]

That's a good list.

The one that most concerns me is 'Blind Spot Bias". By definition, how can you know you are doing it if you are blind to it? And that bias can lead you down the wrong path.

It's why I try to be open to having my beliefs challenged - if I cant defend them, maybe they are a product of my own bias. I know some people don't like to be challenged in any way, but I don't think they are doing themselves any favors.

Have you read Kahneman's "Thinking, Fast and Slow"? Good book IMO, the examples went on and on, but I thought there were some excellent points made.

-ERD50

 

[6miths]

Thanks. Yes very good list.

Was fun to see Richard Thaler along with Salena Gomez explaining derivatives in 'The Big Short'.

 

[JoeWras]

I think one of the biggest biases around is that people are biased to think they don't have biases.

 

[HFWR]

An episode of Through the Wormhole, about bigotry more so than bias, but they discover some interesting things...

http://www.sciencechannel.com/tv-shows/through-the-wormhole/are-we-all-bigots/

 

[gerntz]

Collectively they sound very political to me.

 

[walkinwood]

Have you read Kahneman's "Thinking, Fast and Slow"? Good book IMO, the examples went on and on, but I thought there were some excellent points made.

-ERD50

Yes, I have. And loved it.

 

[walkinwood]

Collectively they sound very political to me.

Please elaborate.

 

[Mulligan]

# 3 "Groupthink" was always a problem where I worked. My fellow administrators would get their panties in a wad when people didn't immediately agree with them... They couldn't understand that consensus and unified front comes after the "devils advocate" scenarios were thrown at them. Just maybe a great idea isn't so great if it can be picked apart.


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[Ed_The_Gypsy]

Have you read Kahneman's "Thinking, Fast and Slow"? Good book IMO, the examples went on and on, but I thought there were some excellent points made.

-ERD50

A very brilliant Brit brought this to my/our attention but insisted that we are powerless to do otherwise.

I disagree. Training can change the automatic response. The Army is a prime example. Firefighters as well. We may be robots, but our programming can be changed.

I have changed the way I deal with money and investment (but that doesn't mean I've got it right yet). My British friend was a clueless investor--gambler, actually.

Managers and political leaders often think they know everything already but fall into these traps. They should read this book.


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[Sunset]

Folks who have lived in 2 or more countries are able to compare different systems, which for the single country person is difficult to even understand.

Yet Nationalism means each country is the best !!

 

[Lsbcal]

I'm impressed by the biaes investors display. It seems that even "experts" have this even though they are undoubtedly aware of investor bias. How else to explain some Boglehead arguments that can go on and on and become personal ... like debating holding commodities as a small part of the portfolio or high yield bonds as a small part of the portfolio. Not that I hold either of these but seeing people get abusive is somewhat disturbing.

Of course, we all have to eventually embrace some investment approach. But why hold it so closely that we feel threatened by discussions of other approaches? Thankfully this forum allows some latitude here. Maybe its the maturity showing through?

 

[Options]

I think one of the biggest biases around is that people are biased to think they don't have biases.

+1

I'm impressed by the biaes investors display. It seems that even "experts" have this even though they are undoubtedly aware of investor bias. How else to explain some Boglehead arguments that can go on and on and become personal ... like debating holding commodities as a small part of the portfolio or high yield bonds as a small part of the portfolio...)

Exactly. Which is why I spend much less time on the BH forum than I ever used to.

Here's an example of what one can expect from "experts" (really?? a so-called expert had these "surprises" upon retirement??):

Retirement Surprises That Surprised Retirement Experts

 

[Mulligan]

I have a bias and am totally aware of it. In fact it totally spearheads my investing decisions. It works for me, but not for others I am sure.


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[haha]

I'm impressed by the biaes investors display. It seems that even "experts" have this even though they are undoubtedly aware of investor bias. How else to explain some Boglehead arguments that can go on and on and become personal ... like debating holding commodities as a small part of the portfolio or high yield bonds as a small part of the portfolio. Not that I hold either of these but seeing people get abusive is somewhat disturbing.

Of course, we all have to eventually embrace some investment approach. But why hold it so closely that we feel threatened by discussions of other approaches? Thankfully this forum allows some latitude here. Maybe its the maturity showing through?

Even in a secular age, people need their religions very much. They just find them in non-traditional places.

Ha

 

[Lsbcal]

Even in a secular age, people need their religions very much. They just find them in non-traditional places.
...

Totally agree on this one.

 

[samclem]

# 3 "Groupthink" was always a problem where I worked. My fellow administrators would get their panties in a wad when people didn't immediately agree with them... They couldn't understand that consensus and unified front comes after the "devils advocate" scenarios were thrown at them. Just maybe a great idea isn't so great if it can be picked apart.

+1. The best leaders I worked for encouraged alternate views--at the appropriate time. The best staff members took full advantage to effectively sell alternatives and point out pitfalls. And, once the decision was made, they went back and worked hard to make whatever option was chosen succeed. If corrections are needed, they get made.
A guy/gal who goes along with the group and only brings good news to the boss isn't helping anyone--especially the boss.

 

[walkinwood]

What is this "boss" that you guys go on about

 

[NW-Bound]

Even in a secular age, people need their religions very much. They just find them in non-traditional places.

Ha

Very perceptive.