In this international bestseller, Rolf Dobelli provides 99 examples of cognitive biases or errors we have all make in our day-to-day thinking. By knowing what they are and how to spot them, we could avoid them and make better choices. This book is essential reading for anyone with important decisions to make. It will change the way we think–at work, at home, everyday.
Four Selected Examples
Why you should visit cemeteries–Survivorship Bias
It is at the cemeteries that you see any failures buried, thus survivorship is extremely low. This example refers to people who have unrealistic expectation. You see some prominent successes and you start doing the same thing. A case in point is rock stars. They are everywhere, but it is not easy at all for anyone to become a famous rock star. In daily life, because triumph is made more visible than failure, we systematically overestimate our chances of succeeding. Behind every author, you could find 100 other writers whose books will never sell. Behind them are another 100 who haven’t found publishers, etc. The media is not interested in digging around in the graveyards for the unsuccessful. To elude the survivorship bias, you must do the digging yourself. Guard against it by frequently visiting the graves of once-promising projects, investments and careers. It is a sad walk, but one that should clear our mind.
Why “no pain, no gain” should set alarm bells ringing–The it’ll-get-worse-before-it-gets-better fallacy
This example states that it is not always things must get worse before they get better. In fact, in the worst case, thing might not get better at all. This is especially true for serious medical case when it is not always true that it must gate worse before it could get better e.g. appendicitis. This could also happens in commerce where sale could keep falling due to whatever reasons, it might not recover whatever the company do. The it’ll-get-worse-before-it-gets-better fallacy is a smoke screen. If the problem continues to worsen, the prediction is confirmed. If the situation improves unexpectedly, the customer is happy and the expert can attribute it to his prowess. Either way he wins. in conclusion, if someone says, “it will get worse before it gets better,” you should hear alarm bells ringing. (But beware: situations do exist where things first dip and then improve.)
Be wary when things get off to a great start–Beginner’s luck
This example says that a great start does not equal to eventual success or victory. Things may get worse subsequently. Thus, don’t be over-confident from the start. Beginner’s luck is especially common in gambling. Someone who wins at the beginning will tend to continue gambling even when they eventually loses. Another instance is in business acquisition. No matter how well and successful is the initial business expansion, the continual expansion could fail due to reason of scale and/or integration. This is even true in the stock market where your initial gains could simply due to the market upward spiral, you will eventually lose as the market turns downward. In fact, history has no shortage of beginner’s luck: the author doubts whether Napoleon or Hitler would have dared launch a campaign against the Russians without the previous victories in smaller battles to bolster them. Watch and wait before you draw any conclusions. Beginner’s luck can be devastating, so guard against misconceptions by treating our theories as a scientist would: try to disapprove them.
Why you shouldn’t read the news–New illusion
This example states that over-reliance on news tends to create a wrong factual awareness of reality as modern news tends to sensationalize and dramatize matters. News is to the mind what sugar is to the body: appetizing, easy to digest–and highly destructive in the long run. Firstly, as a result of news consumption, we walk around with a distorted mental map of the risks and threats we actually face. Secondly, in reality news consumption represents a competitive disadvantage. If news really helped people advance, then journalists would be at the top of the income pyramid, but they are not. Thirdly, news is a waste of time. An average human being squanders half a day reading about current affairs. In global terms, this is an immense loss of productivity. The author predicts that turning our back on news will benefit us. (Instead, read long background articles and books.)
Key Takeaways
- This is a simple and clear book that is suitable for anyone who need to make decisions–which is everyone of us. The end state is that we would have a clear mind to make good decisions.
- Once we are aware of our mental biases, we could avoid making unnecessary mistakes–at both work and life.