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Research in economics and psychology has shown that human beings can be systematically irrational, even as they believe they are not. Why do people fall into such behavioral hazards?
Not only do they misjudge situations, but they do it in fairly regular patterns. Fortunately, as Nobel laureate Daniel Kahneman says, “we can improve our ability to identify and understand errors of judgment and choice, in others and eventually in ourselves. An accurate diagnosis may suggest an intervention to limit the damage that bad judgments and choices often cause”.
Why do people make systematic errors of judgment? What are cognitive biases? Wikipedia lists about 175 biases that afflict our judgments and decisions (read more about biases here). Can we find out whether these biases are affecting our human capital? If so how can we arrest their effects?
Our professionals could help you identify cognitive biases that impair your organisational efficiency, and help build a choice archetecture where cognitive errors can be stopped before they take place.
Emotions are what make us human. But in the face of hard decisions, emotions may sometimes come in the way. Is giving alms to beggars at the traffic signal a good thing or bad? Should taxi companies who over-charge on rainy days be allowed to stay in business? People with a low E-score may cry their heart out to indecision, but people with a high score may be too heartless. What is your 'E' score?
Why would something at hand be used more than something farther? Why should ordering effect influence decisions? Why they say "Out of sight, out of mind." ? If something is really worth it, should people not reach out for that, rather than making do with whatever is ready at hand?
On the one end is risk-aversion, where people are averse to risk such that they would forego favorable alternatives only because these also carry some amount of risk. On the other extreme are those who seek out risk for the thrill of it, even when the risk is clearly dominant. Then there are people who are in the middle of this spectrum. These people are risk neutral. Acute risk aversion could translate into high opportunity cost. People might forego opportunities because these also contain some risk. Risk neutral people will seek to continue status quo, and the safety that comes with it. Moderately risk seeking people are the ones that bring about change in the world, those who create knowledge and wealth for posterity. Extreme risk seeking people could be the destroyer of wealth. Where does your preference lie? What is your 'R' score?
If you are very good at logical reasoning, what are the chances of you also being a good cricketer? Or vice versa? Some people would think it reasonable to hope so. But what if you never played cricket before? What if you happened to play cricket a very long time back? The optimism coming out of good practice or experience is confidence, while that coming out of sheer hope (projection bias) is overconfidence. A little to the right of the centre does us no harm. But a little more could tip the whole balance off. Do you know your 'O' score?