Cognitive Bias in the Age of Machine Learning
Introduction
The way I learned about cognitive biases was through machine learning. The world is changing, and Machine Learning will be a big part of the new world. Machine Learning might decide if you will get a job or even what job you get. Machine Learning is dependent on data. The data that the machine receives dictates what the Machine Learning model will do and how it will do it. If machines are making such important decisions, we should make sure that the data it receives is not biased. We can do this by recognizing our biases. I am going to explain some cognitive biases that are all around us.
Bandwagon Effect
The bandwagon effect is when a person is influenced by another group of people and is increasing in the age of social media. The bandwagon effect can be applied to everything from politics to retail. A great example of this is in the phone industry. People stand in line, waiting for hours to get the new iPhone that came out yesterday. As more people buy the iPhone more people say how great it is. This is one great example of the bandwagon effect in play. Another significant example is politics. It is all over the news these days. News channels and other social media sites can change our perspective on things by showing us the more popular candidate. A new research study published in the Journal of Media Psychology demonstrates how polling information has a powerful influence on our perspectives.
Clustering Illusion
The clustering illusion is when a person sees patterns or “clusters” in random events or data. The clustering illusion can be influenced by superstition or even our past experiences. The clustering illusion can be applied to anything from the stock market to slot machines. Let’s say you have been observing a business, and you see a pattern in the stock market. You invest money in this company. This can be dangerous because the human mind can see patterns that are not there (clustering illusion), and it can cost you money. A typical example of the clustering illusion is when you see shapes or objects in clouds, even when they are just masses of water vapor and dust clumped together with no patterns.
Confirmation Bias
Confirmation bias is when a person believes something is true and unconsciously ignores evidence/information that proves this belief wrong. Confirmation bias can influence what information you find, how you interpret information/data, and how you recall memories. One example of confirmation bias is when a scientist forms a hypothesis and looks only for information to prove that hypothesis correct. Confirmation bias can also apply to the stock market. Let’s say you like the products that Amazon sells, and want to invest in it. This can influence what information you find on Amazon and how you interpret it. You might search for “Why You Should Buy Shares of Amazon,” instead of, “Should You Buy Amazon Stock Right Now?” This is a simple example but shows how confirmation bias can influence the way you think about certain things.
“What the human being is best at doing is interpreting all new information so that their prior conclusions remain intact” — Warren Buffet.
Loss Aversion
Loss aversion is when a person gets affected by a loss more than an equivalent gain. So it would be better not to find $10 than lose $10. Many studies prove that a loss is twice as powerful as a gain. Loss aversion happens a lot in economics. Loss aversion is all about how things are phrased. One real example is that before doctors performed surgery, they told their patients either, “The one-month survival rate of surgery is 90%,” or, “There is a 10% chance of death in the month post-surgery.” When the doctors phrased it as a gain, 84% of people chose surgery. But when phrased as a loss, less than 50% chose surgery. There are many examples of loss aversion and it is ever-present around us.
Another bias similar to loss aversion is FOMO or fear of missing out. FOMO can happen anywhere, but I am going to talk about it in business. Many businesses use the “only a few left” message on their site for products. This makes the customer feel that they might miss out on something if they do not buy it. How does any of this relate to loss aversion? Well, in FOMO, you are feeling pain in missing out on purchasing the product. This is similar to loss aversion in which you feel double the pain in a loss than a gain. A study done by Carleton University demonstrates how loss aversion is a substantial motivating factor in FOMO. FOMO is a widely used cognitive bias that affects us and the people around us.
Why Cognitive Biases are Important
Cognitive biases are all around us, whether you know it or not. It is essential to pay attention to cognitive biases and understand them. They are being applied in medicine, retail, engineering, and many more industries. Being aware of your cognitive biases can help you become a better learner and can help you in making more informed decisions. There are more than 4e+13 gigabytes of data today, and that number is just expected to grow. Being aware of your cognitive biases can make sure that you can find the right data and interpret it correctly.
As time goes on, and the amount of data in the world continues to grow it has become increasingly more important to be aware of our own cognitive biases and understand them well to ensure that they are used to our strengths and not our weaknesses.
Want to learn more about cognitive biases and how they work? Check out this resource:
https://medium.com/better-humans/cognitive-bias-cheat-sheet-55a472476b18
