418. The Hidden Forces Shaping Your Decisions: Personal Biases Explained (Refreshed Episode)

Welcome to episode 418 of the Brainy Business Understanding the Psychology of why People Buy Today's episode is all about personal biases.

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You are listening to the Brainy Business Podcast where we dig into the psychology of why people buy and help you incorporate behavioral economics into your business, making it more brain friendly. Now here's your host, Melina Palmer.

Hello. Hello everyone.

My name is Melina Palmer and I want to welcome you to the Brainy Business Podcast. Today's episode is all about the biases our brains have toward ourselves, what I refer to as personal biases. Yes, we definitely have biases toward other people and there is a dedicated episode about that linked for you in the show Notes and the way our brains are wired to think about our own selves impacts us quickly greatly throughout our lives and careers as well. So understanding those biases can really help you to be more successful. This episode, which originally aired at the end of April 2019, was the first in an eight part series on all the biases and it's kind of different than a lot of the episodes you hear on the show. It's a rapid fire list of sorts with a very light touch on all the concepts that are related to personal biases. So you can start to see a little of the complexity of our brains and of interactions at work and at home. So you can find areas where you might want to do a little more research into a specific topic or concept and you can know what the possibilities are. So you essentially know what you haven't known up to this point and have something that you can look up later when you need more info. This episode is a great resource as you consider your own behavior and look to have better interactions with others.

Don't forget there are links for everything.

Including my top related past episodes and books waiting for you in the show Notes for this episode which are found.

Within the app you're listening to and.

At the brainy business.com 418.

All right.

Let'S talk about personal biases.

I'm going to start with optimism bias. Humans assume they're more likely to have a positive outcome in life compared to other people. So someone might think that themselves and their family are likely to have a great prospect for the future, but the country and families in general have a negative overall outlook and prospects. As I mentioned in that episode, you want to look at ways you can use optimism bias to your advantage when setting bids big goals, but your day to day tasks should be more realistic and less than you think you can accomplish. And this is because of planning fallacy, which is the tendency to underestimate how long it will take us to complete a task. Oh, I'm so bad at this one. This is one of those things that I always tell my husband. This episode is going to be so easy to write. I bet I can get it done in two hours. Or I think I can write and record six episodes by the end of the week and then I'm up past midnight writing out the first episode. Do you ever find yourself with a list of 10 things you need to do today and you only end up getting through two? That's setting yourself up for being disappointed because you're setting a bad anchor. What if you had a goal of one thing to get done and got two done that day? You'd feel awesome, right? Understanding planning fallacy can help you do better in setting more realistic tasks and therefore being happier. And consider this for your clients as well. For example, make it easy to have appointments or work with you because people probably have too much on their plate to go through extra hoops and steps. If you're a coach, don't let people set too many goals between calls with you. Our next bias is called Naive Realism. This is actually one of my favorites because when it's called out it just sounds so silly, but we definitely all do this. Naive realism is the belief that unlike other people, we see reality exactly as it is. We are objective and unbiased. The facts of the world are clear and should be obvious to everyone else. Anyone who agrees with us is rational and everyone else is either uninformed, lazy, irrational, or biased. This sort of sums up the entire episode and the other biases you're going to hear about today. Humans are wired to believe this. Our brains are set up to have this sort of outlook on the world. If you find yourself having conflicts with a lot of people and thinking no one understands what you're saying, how can they not see it? It's so obvious. Take a look inward. Try to have a little perspective and look from that other person's point of view and know we are all biased and irrational, even you. This can help with better communication in teams and also help you understand where your customers are coming from. In most businesses, you are not your ideal client. You wouldn't need to hire you, and what you think is obvious could be your best selling point. So try to be open to to the perspectives of others. Your curse of knowledge will make this hard because you know a lot about your area of expertise. It can be extremely difficult to think about problems from the perspective of people who know less than you, but this is where the magic happens in life and business. This is also why people hire consultants that point out things that were so obvious you can get too close to your own skills and offering to realize what people need, what they would pay for, how they'll actually use your products, and all sorts of other applications. In order to be successful in life and business, you need to be able to understand the perspectives of other people and how they differ from yours, and know that because of the Dunning Kruger effect, those who are unskilled tend to overestimate their abilities and the very skilled experts tend to underestimate theirs. People who promise the moon and sound too good to be true probably are being run by optimism bias and planning fallacy, and they might not really know what they're doing. And try to be aware as you build experience in your space that you are gradually underestimating your abilities, skills, and all the effort and training that went into what you now know and can do and how much more it is than everyone else. Just because it's easy for you doesn't mean it isn't a value to someone else, and expertise should be compensated properly the next bias I want to talk about is similar to naive realism in many ways. It's called the false consensus effect. This is our tendency to overestimate how much other people agree with us because of our naive realism. We think we see reality as it is, and everyone must see it that way too, if they aren't lazy, irrational weirdos. So they must be in agreement or close to it. This can be seen in meetings where people assume silence is consensus or don't leave enough room for others to talk or don't make it easy to have real conversations. As I talked about in episode four, Questions or Answers. Using tools like question storming instead of brainstorming and being open to other perspectives is key to finding the right questions and areas to work on. How many times have you been in a meeting where someone says any questions? No. Good. Let's move on. I remember the CEO of a company I used to work at had learned along the way that he was too quick to jump to the next topic and be victim to the false consensus effect. So when he felt he was ready to jump to the next topic, he would ask if there were questions and force himself, sometimes out loud, to count to 10 at a reasonable pace to give people room to think and ask questions if they had them. Before learning this trick, he might have gotten himself into trouble because of the illusion of asymmetric insight. This is when people think they understand their peers because better than those same people understand them. As with all these biases, we assume we know more and better than others, but that likely isn't true, especially when it's built on false consensus and naive realism. Here's how you could use this At a networking event, if you assume that everyone thinks you don't understand them as well as they understand you, it could be beneficial to ask them questions that help them explain more about themselves to you. We all know people like to talk about themselves. Being a good listener and trying to learn something new about each person you interact with will help shatter this illusion. Both by teaching your brain you don't know as much about people as you think you do, and it will also show them that you care enough to take the time to get to know and understand them. The flip of this concept is the illusion of transparency. I know it would be great if our biases all lined up all the time and didn't contradict each other, but that would be too logical. So people also overestimate their ability to know others and the ability for others to know them. We think we are transparent and great at understanding everyone. There's a similar foundation here. You can see believe we are an open book because we know ourselves so well. While this is sort of the opposite of the illusion of asymmetric insight, it's also based in the same area and the same advice works here. One of my friends once said to me that everyone thinks of themselves and their business as a special snowflake and that their problems are completely unlike anything you've ever seen before, even when it's very common. This is because of false uniqueness bias. The line to walk here is to realize that in most cases people have similar problems and hangups. This episode is a testament to that, but it doesn't mean they want to hear that or for you to tell them their approach or problem or case is humdrum. And just like everyone else, people want to be heard and understood and listened to. Remember the example I just gave of actually listening to them at a networking event? This can also be applied to a discovery call or working with a new team member. Give others the room to explain their situation and then find a way to say I got this without devaluing their false uniqueness bias. If someone says I have a unique issue you've probably never seen before, but don't respond by saying oh no, that's so common you wouldn't believe it everyone deals with that and I help buy. They will shut down and feel that you didn't take the time to understand them. In other words, they will not buy what you're selling. When you're communicating what you offer, use the Forer effect, which is also known as the Barnum Effect, to your advantage. This could also be seen as the astrology effect or the fortune telling phenomenon. People tend to think statements that are vague and general enough to relate to a large group of people are highly accurate and exactly them. This can be used in marketing or advertising efforts. Know that something general can feel spot on for someone receiving the information if they're told it's targeted to them. As an example, I'm going to read your horoscope. Okay? And yes, assume I'm a mind reader and I know your astrological sign. Ready? Reconnect with your self worth today and say out loud I am awesome. You're good at extending your heart to others and helping them with their issues. Now take some of that love and caring and focus it on you. Issues having to do with love and romance are of primary concern. You should take time to evaluate where you are at this stage and nourish this part of your being. Would you say that applies to you or that you could apply those statements to your life? So did everyone else. The right generalities can inspire people to take action, so keep that in mind when creating creating your messaging. And remember that you're also biased by an illusion of control, which is your tendency to overestimate the influence you have over external events. We all know that person who has to wear the same jersey every football season because the team won when they wore it last year and hopefully they wash it in between games. Or thinking that because the team won every game they went to last year, it somehow related directly to their presence on the third tier of the stadium. I'm not saying this is a bad perspective to have. It helps us relate to people and things. Whether you choose to adapt your own approach and traditions in this case is up to you. But perhaps don't get too hung up on it if your lucky socks are in the wash when you have a big meeting to go to. And remember that your clients have a similar illusion of control. Here in Seattle, the Seahawks are all about the 12th man, and they sell a lot of gear to fans who want to come and cheer and show their support for the team as a unit. The 12th man has been known to actually impact the game. We're listed as one of the most daunting fields for opposing teams with the most false starts and a top home field Advantage. The number 12 has been retired because it's the number of the fans, and in one game the fan reaction was so high it actually caused a small seismic event, a minor earthquake, which has been called Beast Quake. The collective of the fans does have an impact on the game, but did my husband's extra scream or jump at that event cause Beast Quake? Would it have happened if he wasn't there? Our bias tells each person who was there that it was because of them that it happened. The illusion of control can be used to build camaraderie and brings value to groups, which I will talk about more next week. And a business or brand like a team can use it in their marketing to encourage the sales of logoware, to sell more tickets or or otherwise encourage interaction with the brand. Have you ever worked on a project where someone made it seem like they did all the work when you know you did more work than them? Or have you ever felt like you do way more work around the house than your significant other or roommate? Well, they're probably thinking the same thing about you. Because of egocentric bias and because of our naive cynicism, we also expect other people to have this bias more than ourselves. So we think that our perception is reality and that we're really doing more work and they're just crazy and probably lazy and don't understand us and out to make us feel bad. My best advice here is again to remember that everyone feels underappreciated like this. So instead of feeling grumpy when you aren't getting praised for loading the dishwasher or for the work you contributed on a project, go out of your way to notice what others have done and show them you noticed. I remember the head of HR giving me similar advice once to praise others and their contributions publicly to show them I value them. And I try to do this whenever I can, but there's always more to be done. And I have one caveat to this and something to remember. Women have been found to be more likely to respond to a compliment in the office or personal by diminishing their own contributions and praising others in a way that makes it seem like they didn't do as much or that it wasn't a big deal. So it's important to praise others for their contributions without diminishing your own efforts. If someone says great presentation, don't say it wasn't me. The team really did all the work. Instead, say thank you. It was so great working with Janice and being able to share her insights with everyone. She's doing such great things in operations, I am excited to incorporate them throughout our department as well. This makes you both look good and shows the effort you put in. Win win. When you're hiring and working with others, be aware of social comparison bias. Because of self preservation and wanting to stand out and be the best, we tend to favor potential candidates whose strengths are not in direct competition with our own. This is closely tied to our self serving bias where we want to claim more responsibility for successes than the things we might have failed on. We want all the glory and none of the blame. This also goes back to egocentric bias because we tend to focus on ourselves a disproportionate amount. We are the center of our own universe in many ways. That's something my dad always used to say. We assume others do the same and are constantly focusing on us all the time. This tendency to overestimate the amount that others are focused on our appearance or the things we do or say is known as the spotlight effect. This is one of those things that causes people to have a fear of speaking up or perhaps public speaking. You're worried that everyone is looking at the one thing about yourself you hate and focus on in the mirror. They're going to be looking at this weird crease in my shirt or I just know everyone's staring at my nose. Or that one crazy hair that refused to cooperate this morning. Didn't it know I planned to go live today? Here's the thing. Because everyone else is the center of their own universe as well, you can relax a little and know they're less likely to be focused on the little thing you've blown up to a big deal in your own mind. Yes, there are trolls out there, but try not to focus on them. Just be your awesome self and your people will find you. This one also made me think of that old commercial for Tide Sticks called My Talking Stain where the guy is in a job interview and as he's trying to answer questions, the giant stain on his shirt is talking gibberish over the top of his answers so the interviewer can't understand his response. This shows the value of understanding the spotlight effect and how it might undermine confidence for someone and therefore providing them with a product that can help with the situation. Smart. There is of course a link in the show notes so you can watch it. It's really funny and even if you've seen it before, it's worth another watch. It definitely holds up. You may think that ads like that don't have an impact on you in the same way they influence others, right? Well, you're in good company because of the third person effect. Everyone believes they're less likely to be influenced by mass marketing than other people. Mass marketing, of course, reminds people of brands and creates associations in the brain and goes directly to the subconscious and they're impactful on everyone. You should be marketing and building your brand. And that's all I'm going to say right now about that one. This seems like as good a time as any to note that we all have a bias blind spot. Let's really hammer this point home, shall we? In case you couldn't tell, we see ourselves as less biased than others and tend to be better at spotting these cognitive biases in others instead of in ourselves. So try to remember that even if you don't see it, it doesn't mean it isn't there. I remember hearing someone say once that they didn't care what the back of their hair looked like because they would never see it. Perhaps that is the bias blind spot on steroids. Other people look at and see the back of your hair a lot, even if you can't see it easily. Perhaps we're willing to forgive whatever we look like from the back because of illusory superiority. This is where we overestimate our own desirable qualities and underestimate those undesirable ones when compared with other people. Perhaps you can relate more with its other names of better than average effect or superiority bias. I'm not going to get into this one too much, but we also tend to think others are more likely to be attracted and interested in us than they actually are. Everyone be aware of this. And instead of saying to use common sense because it's in our genetics to feel this way, I'll say to use restraint and try to use your conscious processing more than might be your natural inclination. Speaking of which, we all think we have more restraint than others and and generally overestimate our ability to resist temptations. Remember the episode on the overwhelmed brain? Most people are only five digits away from choosing chocolate cake instead of fruit salad. One great example of this in business is the timeshare industry, or I guess, gym memberships. They're basically built on people thinking they have enough restraint to accept the free vacation. They sit through the pitch and not buy a timeshare. We all know how that works out. Much like what I will now forever think of as the super special snowflake effect. Humans also suffer from trait ascription bias. We think others have very predictable personalities, moods and behaviors, that they're more one dimensional and that we personally are much more dynamic with varying moods and personalities. That's why all those other people will get a timeshare but we'll be able to resist. They're so predictable. Behavioral economics shows us that while we're not all exactly the same, we're all predictable in similar ways. And just because you don't see all the facets of someone, you are not a three dimensional creature walking around in a one or two dimensional world. Everyone has many facets and it's worth getting to know them if you want them to do business with you. Sort of contrary to this is the actor observer bias. We tend to think that our behaviors are more a result of the situation than our personality, while thinking others actions are more because of their personality than the situation. Again, this is likely because we see ourselves as more multidimensional and we know all of what was going on in our own heads. Let me tell you what I mean. If someone is late for a call or a meeting, you may assume they are inherently disrespectful or lazy or bad at planning. It's about them and their personality. But when you find yourself late for a meeting, it's because your other meeting went long or you were stuck in traffic or were in backtrack packs all day and had to stop at the bathroom or to refill your coffee cup at some point. You are a respectful person who would always be on time if it wasn't for all those outside factors. Do you see the problem here? Remember that other people see you in the same way you see them. If you are perpetually late for meetings or a whole host of other things, even though you can justify it with situations, others will assume it's your personality. Oh, and try to give other people the benefit of the doubt when they're running late. Before I get to the section on how we revise things in hindsight, I want to talk about the overconfidence effect. This is really important in business and life, and hopefully a reminder to slow down and understand what you don't know. For certain types of questions, people will say they're 99% certain in their answers, but they're actually wrong 40% of the time. I'm guessing this is how game shows stay on the air and make money. This can be a problem for entrepreneurs who start a business or enter into a space where the chances of success are very low. And they might ignore the statistics that tell them this because they Are, of course, course, a super special snowflake. This can be good, of course, and we need a little bit of this to be entrepreneurs or to take a risk and break free from the mold. But it's important to balance with due diligence and trying to realize when you're onto something no one else sees versus overconfident about something no one will buy. This is closely tied to pro innovation bias, which is essentially having massive optimism about an invention or innovation or new product and believing it's the next big thing. You're a victim of this bias when it's easy to showcase how useful it is and how easy the thing will be to sell without being able to identify its weaknesses or points of limitation. I guess this is why the old SWOT analysis is useful, right? You need to be able to identify the strengths, strengths, weaknesses, opportunities and threats. And if the only weaknesses you can come up with are missing out on the strengths and the only threats are not entering the market fast enough, you probably aren't digging as deep as you should. All right, we have made it through those personal biases and we're going to be moving on to revising in hindsight. Don't worry, I know there were a lot of concepts there. We are through the bulk of this episode's biases and are going to get through these last ones on hindsight much more quickly. There will be a future episode in this series on Tricks of Memory, but I included these ones in the episode here because they're specifically tied to making yourself look good to your own brain and or to other people. We justify things all the time without even realizing it, so it's good to know of these ways our brain will revise the facts after the fact. Hindsight is not always 2020. It's often a manipulation of the facts. The first of these is post purchase rationalization, an easy one to understand and likely something you've heard before, either from me on the podcast or from other people. People tend to buy on emotion or via the subconscious brain and then use logic and rational arguments to persuade themselves it was the right decision or a good value. So remember, when creating your messaging, you need the scent of the cookies to draw them in and get the subconscious interested. And logic comes later. Another way people have said this is to sell the sizzle, not the steak. We also have choice supportive bias where we'll retroactively say our choices were much more informed than they were at the time we made the decision. We look for the items that validate our choice. This concept will also have an entire biases episode and assume we knew it all on some level. This is a way of convincing ourselves the choices we made were better than they actually were. Sort of giving a mental pat on the back that may not be deserved. We also have an illusion of external agency, which means we think our personal preferences are based on insightful influences and benevolence instead of just being something we like better or have always bought. This is probably the result of that mass marketing doesn't affect me bias from earlier on. People assume they buy Crest over Colgate because of something really insightful or research their brain must have done at some point when it's really because of an advertisement they saw when they were six. This also leads to the illusion of validity where we believe our judgments and choices were accurate. This is especially present when the available information after the fact is consistent with the choice. So if you decided to not invest in a new technology and then a competitor who did invest in that saw a loss last year, you would believe your choice to not invest was accurate and you'll be more likely to stick to your guns in the future. However, the two items may not be related at all, but your brain will have a hard time seeing that. And even if you were presented with new information that conflicted with your assessment because of conservatism belief revision, you would not sufficiently revise your belief. Your brain becomes fake fixed on the thing it believes, and it can be really hard to change it even when new facts show it's wrong. After all, if that assumption was wrong, it's because you were wrong and your choices and evaluations were inaccurate. And no subconscious brain wants to believe that. Once you hit this point, you're suffering from the continued influence effect where you continue to believe misinformation even after it's been corrected or you learned you were misinformed. This old bias can impact decisions you make even if you logically know it to be wrong, because the subconscious will place a higher weight on the thing it learned first because it's uniquely smart and intelligent and all that jazz, Something to learn from this is that telling someone something once is not enough to get them to change a long standing belief of theirs. If you feel like you're talking in circles and saying how dense are they? I've said this all before. Try to think about how much previous information they had in the old way before you came along to teach them something new. You can teach an old dog new tricks, but probably not in just one lesson. Also consider mindset issues that could be holding people back. If you're trying to help someone break a habit of being bad with money and they've always told themselves they're bad with money, they will continue to believe that for a long time and it will take a while to help them see themselves differently. It takes work on both sides to help people to change Okay, I covered a lot of biases in this episode and hopefully many of them resonated with you. Things you can see in yourself or others. And remember, just because you didn't see it in yourself right away doesn't mean it doesn't impact you. So what got your brain buzzing as.

You learned about personal biases today?

For me, I really love talking about.

Optimism bias and planning fallacy.

They're two of the four biases I.

Talked about in my TEDx that keep us stuck in the status quo. These personal biases may not seem like.

They'Re that big of a deal, but.

They can cause so much harm when you aren't aware of them. Whether it is in over committing yourself and putting too many things on your to do list, or underestimating your own biases in being overconfident or focusing on the wrong things, these biases can get out of hand fast. Understanding them so you can be on the lookout for them and adjust when necessary is great for your career and others on your team or those you're mentoring and coaching.

And that last point is why I.

Chose to refresh this episode today. Because on this upcoming Friday's episode, I'm joined by Dr. Ruth Gotian, co author of the Financial Times Guide to Mentoring. We're discussing the value of being both a mentor and a mentee for individuals, and why it matters for businesses. And we also discuss tips and insights from her other book, the Success Factor. It is fantastic. And having this primer on personal biases felt like a great way to get you prepped and ready to get the most out of that episode. If you haven't always been the most.

Coachable person out there and are open.

To changing that, this episode gave you a foundation of some areas to focus on from your own personal biases so you can be a little more open and ready as you tune into that conversation on Friday. And if you're coachable already, that's awesome. That is one aspect of the success factors that Ruth is going to talk about on Friday and a key to getting the value out of mentoring. And I'm guessing there is still room for improvement for you and tons of great value for you in that episode as well. If you aren't already subscribed to the Brainy Business podcast, now is a great.

Time to do so to ensure you.

Don'T miss that episode or any others as we close out the show. Don't forget about those show notes with links to my top related past episodes, books and more. It's all waiting for you in the app you're listening to and@the brainybusiness.com 418. And just like that, episode 418 on.

Personal biases is done. Join me Friday for a brand new.

Episode with Dr. Ruth Gotian, co author.

Of the Financial Times Guide to Mentoring.

It's going to be a lot of fun. You don't want to miss it.

Until then, thanks again for listening and learning with me.

And remember to be foxy.

Thank you for listening to the Brainy Business Podcast. Molina offers virtual strategy sessions, workshops and other services to help businesses be more brain friendly. For more free resources, visit thebrainybusiness.com.