Cognitive Bias might affect decision making

Posted on Posted in PMi-RMP

What do we mean by Bias???

“Practice Standard for Project Risk Management” defines Bias as “During information gathering about risk, the source of information exhibits a preference or an inclination that inhibits impartial judgment.”

Bias in risk data can occur for many reasons, but two common sources of bias are Cognitive Bias and Motivational Bias.

What is the difference b/w Motivational Bias and Cognitive Bias?

Motivational Bias is a discrepancy, usually conscious, motivated by one’s personal situation whereas Cognitive Bias is a discrepancy, usually subconscious, introduced by the manner in which the individual processes information.

Motivational Bias, are beliefs that are distorted by wishful thinking.

Examples:

Salesperson gives low sales projections to ensure “meeting expectations.”
Product champion understates costs and overstates sales.
Individual suppresses uncertainty to appear as “expert.”
Cognitive Bias is a systematic error in thinking that affects the decisions and judgments that people make. Sometimes these biases are related to memory. The way you remember an event may be biased for a number of reasons and that in turn can lead to biased thinking and decision-making.

Examples:

Collecting incomplete or improper data
Processing data improperly
Anchoring and adjusting Overconfidence.
It’s also thought that cognitive bias helps us process information more quickly. Cognitive biases can cause us to make inaccurate judgments, decisions, and interpretations.

How do Cognitive Biases work?
At any given second, the brain is carrying out trillions of mental processes. It’s no wonder that our brain is constantly looking for strategies and rules of thumb that can be applied across various situations to ease the burden of executing all those mental processes. These rules are especially helpful when it comes to making decisions and judgments that are complex. In our attempt to simplify information processes, we may take mental shortcuts that lead us down the wrong path. These thinking errors that we make when we are processing information are known as cognitive bias.

When we are making judgments and decisions about the world around us, we like to think that we are objective, logical, and capable of taking in and evaluating all the information that is available to us. The reality is, however, that our judgments and decisions are often riddled with errors and influenced by a wide variety of biases.

The human brain is both remarkable and powerful, but certainly subject to limitations. Cognitive biases are just one type of fundamental limitation on human thinking.

What Causes Cognitive Biases?
Cognitive biases can be caused by a number of different things, but it is these mental shortcuts that often play a major contributing role. These mental shortcuts are known as heuristics, and while they can often be surprisingly accurate, they can also lead to errors in thinking. Social pressures, individual motivations, emotions, and limits on the mind’s ability to process information can also contribute to these biases.

These biases are not necessarily all bad, however. Psychologists believe that many of these biases serve an adaptive purpose – they allow us to reach decisions quickly. This can be vital if we are facing a dangerous or threatening situation. Relying on mental shortcuts can often get you out of the way of danger in situations where decisions need to be made quickly.

Cognitive biases and their importance for critical thinking:

All of us agree that logic and argumentation are important for critical thinking. But sometimes background knowledge is also very important. There are different types of background knowledge that are relevant to critical thinking in different ways. One of the most important types of background knowledge is knowledge of how our minds actually work– how human beings actually think and reason, how we actually form beliefs, how we actually make decisions. There are a lot of different scientific fields that study how our minds actually work. There’s behavioral psychology, social psychology, cognitive psychology, cognitive neuroscience–a bunch of fields.

The heuristic is the rule of thumb that we’re using to make the decision or the judgment. The bias is the predictable effect of using that rule of thumb in situations where it doesn’t give an optimal result.

All human activities are susceptible to bias, especially when dealing with uncertainty. Both motivational biases, where someone is trying to bias the result in one direction or another, or cognitive biases, where biases occur as people are using their best judgment and applying heuristics, may occur. This should be explicitly recognized and addressed during the Identify Risks process. Sources of bias should be exposed wherever possible, and their effect on the risk process should be managed proactively. The aim is to minimize subjectivity, and allow open and honest identification of as many risks as possible to the project.

Success in gathering risk analysis data requires the ability to recognize when biases occur and combating that bias or developing other unbiased sources of the data.

To conclude:

Because we’re constantly making judgments and processing information, we are constantly at risk for cognitive bias. At one point or another, we’ve all been guilty of some type of cognitive bias. Although it’s impossible to completely avoid cognitive biases, it is possible to understand what they are so that we can look for them when they arise and adjust our judgments as needed.

In the same way that project risks and assumptions are documented, and as a matter of best practice, project decisions–and the basis on which those decisions are made–should also be recorded.

Have you ever wondered why communication with senior stakeholders so often breaks down? It’s because of the deeply embedded cognitive biases innate to all of us. When communicating with senior stakeholders, try to help them resist these biases while working to avoid them yourself. Rather than provide your solution, offer a range of ideas that allows stakeholders to own the solution (with your help). Aim to shift their thinking to a viable benefits-focused solution.

In doing so, we should pay close attention to the language used–and the thought processes that those words represent–in coming to a decision. Because the language used to frame a decision may tell us much about the presence of cognitive bias and the extent to which it might have influenced a decision in a specific way.
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So, my advice to someone new to project management is to always stop, look and listen when coming to a decision and attend to the different ways in which project decisions can be made.

At the very least, someone new (or not so new) to managing a project should pay close attention to how decisions affecting the project outcome are arrived at and, in particular, the basis from which those decisions are derived.

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