The signs that an economic crisis was coming were present and evident long before the reality was there. Some reasons why these signals are ignored by so many people, are that decision makers jump to conclusions that are likely (enough) and constitute the most comfortable situation , instead of investigating the matter in more depth. This is what scientists Paul J. H. Schoemaker og Georgde S. Day have presented in the MIT Sloan Management Review article “Why We Miss the Signs”.
Here they present the three of the most common decision traps. These traps constitute the so called confirmation bias (or myside bias) as “an irrational tendency to search for, interpret or remember information in a way that confirms preconceptions or working hypotheses.”. It includes:
Filtering out information
We focus on information we expect to get. Psychologist call this “selective perseption”, seeing what we want to see, reinforcing your mental model, plans and positions.
We tend to see the information we get in a light that further enhances our perspective. An example of this could be shifting blame onto others. We can also be self-centered, and therefore overemphasize the impact we have. It is quite common to view ones own action as more important than those of others. Similarly, we tend to think that our own organization is a more significant player than it actually is.
Seeking information to confirms our view
In addition to filtering information, we have a tendency to protect our position by seeking more information that supports our view. Instead of choosing a more balanced strategy, we tend to seek sources that present even more evidence to confirm our position – reinforcing our beliefs and decisions.
A fourth and group-oriented aspect that easily comes into play – in addition to these personal level – is what Irving Janis calls “groupthink”. Group think is where members of a group think and influence one anothers views and positions in order to get harmony within its members.
Tips on what to do? (see this post)