Confirmation Bias

Answer 1

In my last post I discussed the Texas Sharpshooter Fallacy and its ability to cause us to see a small portion of data as confirmation of something that it isn’t. In large sets of data there are always small anomalies that can lead to unfounded conclusions if they’re not examined objectively. A similar effect that also causes us to view things in a subjective way is confirmation bias. Confirmation bias is the propensity to favor information that validates our preconceived notions and beliefs. There are three main types of confirmation bias. They are biases in our search for information, interpretation of new information, and memory. First, let’s discuss the bias in our search for information. Have you ever seen an opinion poll that had leading, and clearly biased questions? Many internet polls are famous for this sort of thing. They’ll ask a question in such a way as to make the answer for which they’re looking to be a more likely response. Or they’ll go to news sources that are biased in the same way they are. Have you ever met a staunch conservative who would only trust news from Fox News or a liberal who only listened to news from MSNBC or the Huffington Post? This is an example of how bias works in our search for information. If you believe that markets are heading up, you’ll most likely seek out bullish news sources. The internet makes this kind of search extremely easy and can ensure we’re all continually insulated against any news or information that goes against our ideas or beliefs. Confirmation bias can also affect how we interpret new information. When we receive new information about a topic about which we already have a preconceived idea or belief, we tend to interpret that new information in a way that that confirms our existing bias. Studies have shown that we’re far more likely to believe evidence for our closely-held beliefs and completely ignore, excuse away, or set a higher standard for evidence that contradicts those beliefs. Lastly, confirmation bias can affect the way we remember things. Even though we tend to seek out information that confirms our biases, and interpret ambiguous information in a way that confirms our bias, sometimes we still see and hear contradictory information. But the brain also tricks us by filtering that out after the fact. Psychological studies suggest that given the strong forces at play in these three realms, confirmation bias can strongly affect the way we live our lives and make decisions. So whether you believe that the markets are headed up or down, make sure to filter out the effect of confirmation bias; at least as much as possible.