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It is flawed decision-making triggered by “social proof”-driven thinking that causes toxic bubbles in the stock market, points out Dobelli, noting that this tendency “exists in fashion, management techniques, hobbies, religion and diets. It can paralyse whole cultures, such as when sects commit collective suicide.” But “social proof”, or a decision based on the herd instinct, is only one of the 99 “cognitive errors” that he describes in this insightful and entertaining volume. For Dobelli, a cognitive error is “a systematic deviation from logic”. By labelling such errors as “systematic”, he wants to emphasise that these are not casual errors in judgment but routine mistakes hardwired into our thinking, resulting in patterns that are repeated over centuries. He draws on evolutionary psychology to explain some of these errors. The herd instinct, for instance, did serve us well when we were hunter-gatherers — when your fellow tribe members suddenly bolted on seeing a vaguely lion-like entity in the distance, it made sense to flee with them rather than stay back to verify for yourself whether it was a lion or just a rock. But today’s world rewards independent thinking, not the herd, argues Dobelli, and that puts a premium on the ability to think without cognitive errors. The other cognitive errors Dobelli dwells on include confirmation bias (where you filter out any new information that contradicts your existing views), sunk cost fallacy (you won’t scrap a project that is clearly headed for failure, such as the Vietnam War was, because you have invested too much money or effort in it already), availability bias (using information that is easily available rather than one that is more relevant but harder to obtain), and survivorship bias (you start a novel inspired by the success stories of best selling novelists but ignore the fact that millions never complete their manuscripts, or if they do, don’t get published).
Source : https://www.thehindu.com/todays-paper/tp-opinion/eliminating-cognitive-errors/article24787917.ece
