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LinkLog: Perceptual Biases

In David Brook’s op-ed column in NYTimes titled The Behavioral Revolution:

Perceiving a situation seems, at first glimpse, like a remarkably simple operation. You just look and see what’s around. But the operation that seems most simple is actually the most complex, it’s just that most of the action takes place below the level of awareness. Looking at and perceiving the world is an active process of meaning-making that shapes and biases the rest of the decision-making chain.

perceptual biases that distort our thinking: our tendency to see data that confirm our prejudices more vividly than data that contradict them; our tendency to overvalue recent events when anticipating future possibilities; our tendency to spin concurring facts into a single causal narrative; our tendency to applaud our own supposed skill in circumstances when we’ve actually benefited from dumb luck.

And looking at the financial crisis, it is easy to see dozens of errors of perception. Traders misperceived the possibility of rare events. They got caught in social contagions and reinforced each other’s risk assessments. They failed to perceive how tightly linked global networks can transform small events into big disasters.

How does one prevent perceptual bias? I recall being carried by the current and strongly influenced by the strong current during the dotcom days. Every action I took was deeply influenced by the perception that we were part of a movement. It reflected in both my short and long term decisions (some of them with disastrous consequences). I think one supporting current was the urge not to “miss the boat”.