Availability Heuristic and Decision Making

The cognitive biases caused by the availability heuristic

Availability Heuristic and Decision Making

When making decisions, people usually have the best intentions in mind. You want to take everything you know into consideration and make a decision that guarantees the best possible outcome.

But even when you want to be objective, it’s difficult to do so. Your personal perception can skew your decision-making process and cloud your judgment. One of the causes of this is the availability heuristic.

Let’s take a look at what the availability heuristic is and how it can mislead us. We’ll also look at ways to avoid the availability heuristic.

What is the availability heuristic? 

Heuristics and biases are ways to speed up the process of finding solutions.

The availability heuristic is just one type of heuristic. In this process, people use the most easily accessible information to inform their decision-making. 

Easily accessible information can be:

  • Information that you memorized more easily
  • Something that affected you strongly or had a bigger impact on you
  • Events that happened more recently in your memory

The availability heuristic is ease of retrieval. The easier something is to recall, the more ly you are to use it to form your beliefs and opinions.

How can it mislead us?

The availability heuristic works by prioritizing infrequent events recency and vividness. For example, plane crashes can make people afraid of flying. However, the lihood of dying in a car accident is far higher than dying as a passenger on an airplane.

In 2019, someone’s odds of dying in a motor vehicle crash were 1 in 107, while there were too few airplane deaths that year to calculate the odds. Yet, very few people will avoid getting in a motor vehicle they would an airplane.

The reason plane crashes seem scarier is because they’re typically treated with more gravity in news stories. And, there’s much more media coverage of them in general.

According to research, the availability heuristic will often lead to risk-averse human behavior.

This means people will try to avoid dangerous situations, even if those dangers are unly.

But the availability bias doesn’t just affect decision-making for dangerous events. It shows up when you: 

  • Make decisions at work 
  • Vote in an election
  • Decide to trust your gut

And many more instances in the real world.

This mental shortcut to making decisions can cause you not to consider all the facts with equal weight. As a result, it can lead you to make the wrong assumptions or an uneducated decision.

Why does it happen?

So, why does our mind take these shortcuts to make decisions? Why do we tend to overestimate the accuracy of something that comes to mind easily?

Human cognition takes these shortcuts to aid in decision-making. When information is more easily accessible, it’s more efficient to use that information to make a decision.

Ease of recall is dependent on how recently and vividly something has impacted you.

This means it’s easier to base your decisions on recent events compared to something that doesn’t easily come to mind.

However, efficient doesn’t automatically mean effective. Let’s consider how people make decisions for their insurance policies.

If you live in an area where floods are highly unly, there’s a low lihood that you’ll get insurance against flooding. However, in 2006, the year of Hurricane Katrina, flood insurance policies increased by 14.3%.

This is more than three times the usual growth. Even if people weren’t ly to experience a flood, the images of Hurricane Katrina were all over the national news.

People changed their insurance policies perceived risk, not actual risk. They perceived that they were in more danger of a flood because the information was easily available and dramatic.

During the same period, someone could have done research to discover the real chances of experiencing a flood in their area. But this wouldn’t be the easiest way to get information.

On the other hand, news of the floods caused by Hurricane Katrina was readily available everywhere, without people needing to look for it.

As Daniel Kahneman, an Israeli psychologist and author of the book Thinking, Fast and Slow, explains: “The brains of humans contain a mechanism that is designed to give priority to bad news.”

Kahneman and his research partner, Ivan Tversky studied these judgment biases in the 1970s and 1980s. They originally coined the phrase ‘availability heuristic’ in 1973 and went on to receive a Nobel prize for their work.

3 examples of decision-making the availability heuristic 

So what does the availability heuristic look in a real-life setting? Here are three examples of how it can manifest during the decision-making process.

1. Deciding who to promote to a new leadership position

Let’s say a manager needs to promote someone to a leadership position. They’ve narrowed down the pool of candidates to two people.

Both candidates have strong leadership skills. They’ve also both made some similar mistakes in the past.

The first candidate once forgot to send an important email before going on vacation, which resulted in a project falling behind. Meanwhile, the second candidate made a very similar mistake while working directly for the hiring manager.

The manager remembers the second candidate’s mistake most vividly. This is because they weren’t directly affected by the first candidate’s mistake. It’s easier for them to retrieve this information. Because of the availability heuristic, this manager gives more weight to the second candidate’s mistake.

Although both candidates previously made mistakes that led to consequences of the same gravity, the manager decides to promote the first candidate.

2. Making political decisions under uncertainty

Some studies support the notion that people in positions of political power use the availability heuristic. They do this when they have to make complex decisions during uncertain times.

So, if they need to make a decision, this means they’ll look toward more memorable events to influence their decisions.

3. Considering new employment opportunities

Let’s say you’re considering leaving your current company for a new one. There were recent budget cuts where you work. This led to several of your colleagues losing their jobs.

You were demoted to your previous position.

When you read about employees’ experiences at the company you’re considering moving to, you realize similar issues happened there before, too. However, you weren’t directly affected by these events.

Making a decision with the availability heuristic means that you’d prefer to switch over to the new firm because you believe you’re less ly to lose your job.

However, if you consider all the facts equally, you’d realize that the new firm may be a riskier decision because their employee retention rate is very low.

The mere exposure effect 

The mere exposure effect is a cognitive psychology concept in which “repeated, unreinforced exposure to a stimulus would result in increased liking for that stimulus,” according to Robert F. Bornstein and Catherine Craver-Lemley.

R.B. Zajonc coined the term “mere exposure effect” in 1968. But further studies from Bornstein and Craver-Lemley continue to confirm this phenomenon is real.

This means that you’re more ly to something if you get more exposure to it. For example, you’re more ly to enjoy specific genres of music, jazz, if you grew up listening to that.

Considering the mere exposure effect, it makes sense that people use the availability heuristic to make decisions more easily. More exposure to certain events or knowledge means that you’re more ly to think about it when it’s time to make a decision.

It also means that you’re more ly to , and therefore believe, the facts you’re more exposed to — regardless of their prevalence.

This is why echo chambers occur. When you surround yourself only with friends, family, colleagues, and news sources that reinforce your existing beliefs and biases, you’ll be more ly to give those sources more weight when a conflict arises or work harder to find common ground.

The availability heuristic and behavioral economics 

The availability heuristic also has a huge influence on how people behave with their finances.

For example, investors are more ly to make risky trades without the right information if they’re overconfident in their abilities. Inexperienced traders are also more ly to jump on the bandwagon when they hear of other people making money from a specific trade.

Let’s look at a recent example with Bitcoin. People flock to purchase Bitcoin without necessarily doing research beforehand when they hear that trusted tech personalities Elon Musk believe in that currency.

This causes a surge in demand, which increases the value of the coin. Because the value increases, more people buy into it in an attempt to make a profit. But they don’t always know how the coin works.

For example, Bitcoin spiked 6% after Musk stated that Tesla would ly start accepting it as payment again.

People can also make financial decisions what happens to their friends and family. For example, you could be tempted to buy a lottery ticket after your friend wins the jackpot.

The fact that this happened to someone you know doesn’t raise your odds of winning the lottery. For example, you have 1 in 302,575,350 chances of winning the jackpot for MegaMillions.

But because it happened recently and affected someone you know, you’re more impacted by the event. This means you’re ly to believe you have better odds of winning than you really do.

How to avoid being swayed by the availability heuristic

Now that you’re aware of the availability heuristic, what can you do about it? It’s much easier to make well-informed decisions when you’re aware of your cognitive biases.

Here’s how to overcome the availability heuristic and make more educated decisions.

1. Avoid making impulse decisions or judgments

When you’re about to make a decision on the fly, take a moment to think about it. What’s informing your decision? Where’s your judgment of the situation coming from?

Here’s an example. Let’s say you’re booking a hotel for your team for an upcoming work conference.

In the past, your company has always done business with the same hotel chain. Everyone has always received good service and had a great experience.

But when you make the booking, you remember the latest story you heard from a family member. They had a bad experience at the same hotel chain in another location.

If you made an impulse decision, you could decide to take your business elsewhere to organize the conference. However, it’s important to consider all the facts.

For instance, you know that your family member often exaggerates stories. You also know that in ten years, your company has never once had someone complain about this hotel chain.

Plus, you also know that you’d be booking in a different location.

Considering all these facts, the odds of having a bad experience are unly if you decide to book with this hotel chain. 

2. Clear out your echo chambers

In order to make more informed decisions, it’s important to seek out information sources that don’t necessarily line up with your personal beliefs.

For example, try to get your news somewhere other than your social media feed. Your social media feeds will only give you more of what you already engage with.

Make a conscious effort to seek out other points of view.

Recent events can skew your perception of reality. But if you take a look at long-term trends and patterns, they will ly tell a different story.

For example, let’s say that you manage an employee who’s been showing up late to work this week. Before deciding how to handle the situation, take a look at this person’s patterns.

For instance, if they’ve seldom been late in the last five years, perhaps this is only a short-term issue. Consider asking them if they need support of any kind.

If patterns show that this person has been late often throughout their time at the company, they may need a more serious type of intervention.

4. Consider overall statistics

If you know several people who are left-handed, it doesn’t mean that the majority of people across the world are also left-handed.

Instead of relying on the people close to you to understand the probability of something, research the base rate. The reality may not reflect the small sample of people in your life.

Why it’s important to avoid the availability heuristic to improve your decision-making

The availability heuristic allows people to make decisions faster. But it also increases your chances of making poor decisions. And it keeps you stuck in the same cognitive biases.

Overcoming the availability heuristic can be difficult, but it’s not impossible. You can get personalized coaching support from BetterUp to drive your personal growth and decrease your biases. 

Try a custom demo today to get started.

Источник: https://www.betterup.com/blog/the-availability-heuristic

Availability Heuristic: How it affects our judgments?

Availability Heuristic and Decision Making
When trying to make a decision, a number of related events or situations might immediately spring to the forefront of your thoughts. As a result, you might judge that those events as more frequent or probable than others.

You give greater credence to this information and tend to overestimate the lihood of similar things happening in the future.

Availability heuristic operates under the principle that: if you can think of it, it must be important We tend to believe things that come more easily to mind as more accurate reflections of the real world.

In general, a heuristic is a rule-of-thumb – a mental shortcut that helps guide our decisions. Our brains use mental shortcuts (heuristics) to make split-second decisions. Heuristics, also termed biases, affect how we process complex information. The availability bias happens when we judge the lihood of an event.

Origin of Availability Heuristic

In the late 1960s and early 1970s, Amos Tversky and Daniel Kahneman started working on examining human judgment under uncertainty. Prior to that, the predominantly held view of human judgment was of humans as rational actors.

Kahneman and Tversky discovered that judgment under uncertainty relies on a limited number of simplifying mechanisms rather than extensive cognitive processing. One simplifying mechanism we employ to judge an event is how many similar instances come to our mind.

In 1973, Amos Tversky and Daniel Kahneman labeled this phenomenon availability heuristic.

What is Availability Bias?

An availability heuristic is a mental shortcut that relies on immediate examples that come our mind when evaluating a specific topic, concept, method or decision. We tend to use a readily available facts to base our beliefs about a comparably distant concept.

We tend to assume that future events will closely resemble our recent experience. The frequency of an event’s occurrence and the ease of recall affect our judgment. We tend to attribute higher weightage to information that most easily comes to our minds.

Because of the availability bias, our perceptions of risk may be in error and we might worry about the wrong risks. This can have disastrous impacts. Ease of recall suggests that if something is more easily recalled in memory it must occur with a higher probability.

This phenomenon distorts our understanding of real risks. For example:

  • Most people over-estimate the lihood of attacks by sharks than traffic accidents
  • Periods of very warm or very cold weather affect our beliefs on climate change
  • A movie about a nuclear disaster might convince us that a nuclear war / accident is highly ly

Decision-making agencies, from families to governments spend inordinate time to address unfounded fears. In so doing, they ignore much more common and controllable threats. In this process, they also misdirect resources that are put to better use elsewhere.

Demagoguery

Demagogues have understood the coercive effect of our availability biases. They rouse rabble to fever pitch and ensure that our mental alertness is always on the high.

Historically, demagogues have leveraged our availability bias and tap into our fears to shape public perceptions and manipulate the populace.

For example, Joseph Goebbels, the Nazi propaganda minister mastered this manipulation technique to move the entire German population and the country to World War II:

If you tell a lie big enough and keep repeating it, people will eventually come to believe it.

The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie.

It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.

On plane crashes

Perhaps you had just read a news article about a massive plane crash. The fear-invoking headline, paired with the image of a wrecked plane wreathed in flames, leaves an easily recalled impression. This leads you to wildly overrate your chances of dying in a similar plane crash.

This is the availability heuristic bias at work. Hence, you tend to rate air travel as more dangerous. The mode of transportation that Americans chose in the aftermath of September 11 attacks profoundly demonstrate this heuristic.

The availability bias instilled fear of air travel among large segments of the American population. In contrast:

For example, in 2016, 10 planes crashed and were reported by press around the world. However, the media did not state that these were 10 of 40 million flights that landed without any incident that year.

In fact, 2016 was the second safest year in aviation history. Alas, reporters hardly seem to care to report such good news! So, when you are not in any immediate danger but your alarm bells chime, don’t blindly submit to your fears.

Assess your risks when you are calmer.

Behavioural economics

In Thinking Fast and Slow[1], Daniel Kahneman writes:

People tend to assess the relative importance of issues by the ease with which they are retrieved from memory—and this is largely determined by the extent of coverage in the media.

This heuristic also manifests itself in business, stock markets, economics, weather, etc. Our short-term analyses aren’t only invalid, but also unhelpful and misleading. For example, a legion of economists pronounced events the 2009 financial crisis as unthinkable right until it happened.

The booming economy and the US housing bubble that preceded the 2007-2008 financial crisis provided positive indicators for an upward economic trajectory. These indicators proferred no justification to assume the worst-case scenario of a global economic crisis, which eventually happened.

In this case, the economists fell prey to the availability heuristic.

On a smaller scale, a study[2] by Karlsson, Loewenstein, and Ariely (2008) showed that people are more ly to purchase insurance to protect themselves after a natural disaster they have just experienced than they are to purchase insurance on this type of disaster before it happens. In support of this study, Max Bazerman adds[3]:

This pattern may be sensible for some types of risks. After all, the experience of surviving a hurricane may offer solid evidence that your property is more vulnerable to hurricanes than you had thought or that climate change is increasing your vulnerability to hurricanes.

Prevalence

The longer we preoccupy ourselves with an event, the more available it will be in our minds. And, the more probable will we believe the event to occur. The problem is that certain events tend to stand out in our minds more than others.

Excessive media coverage can also cause this to happen. Sometimes, the novelty or drama surrounding an event can cause it to become more available in our minds.

Because the event is so unusual, it takes on greater significance, which leads us to incorrectly assume that the event is much more common than it really is.

The attention which we lend to an experience is proportional to its vivid or interesting character; and it is a notorious fact that what interests us most vividly at the time is, other things equal, what we remember best. (William James)

Heuristics play an important role in how we make decisions and act upon information in the world around us.

The availability heuristic can be a helpful tool, but it is also important to remember that it can sometimes lead to incorrect assessments. Just because something looms large in our memories does not necessarily mean that it is more common.

Hence, it can be helpful to rely on numerous tools, reliable data and decision-making strategies when we making decisions and choices.

The availability heuristic describes behavior that results from numerous shortcuts that our brain makes in order to process all of the world’s information. The availability heuristic is a core cognitive function that saves mental effort we often go through. Unfortunately, simply knowing how it works is not sufficient to completely overcome it. Although awareness alone cannot change human behavior, it is essential to support and implement policies that take our heuristics into account. Taking steps to recognize and check the availability heuristic is crucial for designing fair systems, equitable treatment for consumers and citizens, architecting regulations, writing laws, preventing crimes, improving accountability, etc.

Источник: https://thinkinsights.net/strategy/availability-heuristic/

Psychologydo
Добавить комментарий

;-) :| :x :twisted: :smile: :shock: :sad: :roll: :razz: :oops: :o :mrgreen: :lol: :idea: :grin: :evil: :cry: :cool: :arrow: :???: :?: :!: