Top Ten Behavioral Biases, Illustrated (mostly via popular culture)

“Life is the sum of all your choices,” Albert Camus (allegedly) informed us. Unfortunately, our decision-making is far from perfect, with too many outcomes weaned on bourbon and poor choices.

We choose poorly, far too often, on matters big and small, vital and prosaic, important and ordinary.

As the Nobel laureate Richard Thaler explained, these sorts of foibles “should be considered the rule rather than the exception.” We each like to think we’re “the only exception.”

But we aren’t.

“Not Waving But Drowning,” Timna Woollard

Sometimes, what we think we “see” is ambiguous or just plain hard to sort out. As the English poet Stevie Smith recognized, the same facts can be interpreted in diametrically opposed ways, with potentially disastrous consequences: “Not waving but drowning.” Ofttimes, we don’t perceive reality all that well.

Since we are drowning in popular culture today – amplified “to 11”…

…by the media, social and otherwise – this series will try to turn that reality on its head, mostly using popular culture to illustrate and, I hope, illuminate our behavioral and cognitive biases so that we might get (at least) glimpses of truth. We could learn much about our biases if we studied the character flaws and errors of Socrates’s interlocutors in Plato’s dialogues. The roots of behavioral finance date back to at least 1688. But I think memes, clips, and songs will have more impact.

I also hope and trust you’ll enjoy the ride.

Here is what’s coming:

1. Believing is Seeing (Confirmation Bias)
2. A Bird in the Hand (Loss Aversion)
3. Welcome to Lake Wobegon (Overconfidence)
4. Intentions and Outcomes (Self-Serving Bias)
5. Everybody Loves a Winner (Herding)
6. The Map is Not the Territory (the Narrative Fallacy)
7. Planning is Guessing (the Planning Fallacy)
8. I Knew It All Along (Hindsight Bias)
9. Fighting the Last War (Recency Bias)
10. Often Wrong but Never in Doubt (Bias Blindness)

Special Feature: Behavioral Biases Playlist (YouTube)

Fixing a problem begins with understanding there is a problem. I trust this series of illustrations will provide at least a bit of illumination of the bias problems that so routinely beset all of us.

I want it to be fun, too. Don’t forget the fun.