I love my new tyres!! They were a real bargain, the brand has the best reliability and durability in the market. That is my story, I am sticking to it and you can’t tell me anything different because I won’t believe you!! Welcome to the world of the confirmation bias.
In a nutshell the confirmation bias is the way we pick data to confirm our beliefs. We look for information that confirms our views and ratifies our decisions. This happens both consciously and unconsciously.
Not only do we look for information that confirms our beliefs. We also actively discount and often don’t listen to information that is contrary to our belief about a product, person, an investment strategy and so on.
The confirmation bias is everywhere. It just doesn’t impact on decisions about money, but also our impressions of people.
I remember a few years ago, one of my girlfriends started dating a new man. His introduction to the group (there were eight of us), didn’t go well, and we unanimously agreed that he was totally unsuitable for her and a bit of an idiot. We didn’t tell her that of course. But the confirmation bias had kicked in and over the next couple of years as far as we were concerned that first impression stuck, despite our girlfriend telling us how wonderful he was; we would continually find fault and overlook any positives. I should add that they are now happily married. Do the rest of us still think he is an idiot? Well that is for us to know……
The bias can also work the other way. You may have employed someone to work in your business who on paper looked like an ideal candidate. But after a short period of time the cracks start to show and others have to do their work because the person you employed is incompetent. You won’t see this because you are so impressed that they turn up on time and stay late and are so good with the clients…..Yes, I have been guilty of this in my past.
Anyway, back to the confirmation bias and money.
Let’s talk briefly about our friendly marketers and brands and how the confirmation bias can work in their favour. This could be any product from cereal, to clothes, to cars, to investment funds, but the marketers plan is the same.
“Let’s spend lots of money on advertising and get the product anchored in our customers head. We will tell them how wonderful our product is, they buy it and once they are our customer, they won’t listen to our opposition and we have a loyal customer …….for a while anyway.”
Think how much brand loyalty costs you. I shudder to think how much my loyalty to a particular skin care range has cost me over the years. Not only that, I introduced my daughter to it at a young age and now she is hooked as well.
So, how do you overcome confirmation bias? Awareness of what a confirmation bias is and how it can affect our thinking is a good starting point; here are three practical suggestions.
- Start monitoring your choices. Look back at some of your past purchases, for example are you seeing patterns of brand loyalty for no logical reason?
- Start asking yourself questions. Is this assumption correct? Am I getting both sides of the story and more to the point, am I taking both into account? Be your own ‘devil’s advocate’
- Check your reasoning. On a big ticket item, you might want to check with a friend or colleague for a second opinion be open to listening to their feedback. Make sure you don’t find someone who is simply going to say what you want to hear.
If any of this is striking a chord with you, we would love to hear your own stories and if you have any questions send us an email
Lynda Moore http://www.mymoneyseeker.com