Paul Sloane talks with Steve Cantwell, a psychologist and magician, about cognitive biases that sabotage business decisions. Cantwell uses magic tricks to show how the sunk cost fallacy and other biases distort our thinking, making the lessons stick.
Hi, I'm Paul Sloane, and I'm pleased to say that today I'm joined by a friend who is a psychologist, a speaker, and a magician. So, Stephen Cantwell, welcome. Thank you very much.
Thanks for having me. So what do you speak on? I speak about cognitive biases. These are like optical illusions in the mind. We're always subject to optical illusions. We see them in books and things. We don't realize our minds are subject to them all the time, and this influences our decision-making. And why is this important to business leaders? Business leaders are making decisions all the time about money, about personnel, about the direction the business is going. But if they're being subject to these misinterpretations in the mind, then they're not necessarily making rational decisions, which means they might be making the wrong decisions. Could you give us an example? A very good example with money is the sunk cost fallacy. If you've got Project A on the go and you've spent £5 million on it so far and you've got £5 million left to spend, and then you realize actually Project B is better, the tendency— because you worry about losing that £5 million you've already spent on Project A— the tendency is to stick with Project A even though the better rational decision would be to switch to Project B.
So you believe that cognitive biases are leading to bad decision-making which is costing businesses Money.
All the time, and I teach people when to be aware when that might be happening to them.
And I believe you've written a book on this.
I have. It's called Bias Beware, which is also the title of my talks, and it's all about these cognitive biases, all about the ways we're influenced, when we're influenced, and how to be aware of when it's happening. And how does your magic play into this? It's all very well giving a dry talk and teaching people things about when to avoid making these disastrous mistakes, But they might well forget it if they're not entertained at the same time. If I can entertain people by demonstrating the principles with magic, then they're going to remember it and they're going to be entertained. Sounds great.
