May 24, 2019
This episode is about present
versus future biases. This is part 4 of our 8 part series about
biases. We've already talked about personal biases, how we think
about ourselves versus other people, and memories. When it comes to
present versus future, people want their payoffs now, so humans
tend to place a greater weight on the outcome that is closer to
now. Other things that impact our decisions include losses and
risks. We are impacted more by losses than gains. We are also
biased towards maintaining the status quo.
I talk about optimism bias and
even pessimism bias. When you know the rules of the game, it can be
easier than you think to trick your brain into doing more in your
favor – whether it is making choices today that you will appreciate
tomorrow, or helping to get yourself out of a negative spiral. This
episode will help you understand why we tend to make decisions a
certain way and enable you to make better decisions for your
business and your life.
- [04:10] People want their
payoffs as quickly as possible. We place greater weight on things
that happen closer to now.
- [04:31] This is closely tied
to time discounting (what I call the “I’ll start Monday
- [04:39] We tend to make
decisions today that our future self may not be as happy
- [05:39] Due to
diversification or projection
bias, we may think our
future self will want more variety than we really want or will
- [06:07] You think you'll want
options that are more virtuous - could be related to
- [07:14] Due to
impact bias, we
overestimate the duration of intensity of the impact of how we will
feel in the future.
- [07:50] We are also victim
to projection bias, which means we overestimate how much our
future self will share the preferences we have today.
Reactance is the
urge to rebel and do the opposite of what someone wants you to do
to hold on to some form of control and power.
Irrational escalation – also known as the sunk cost
fallacy – where people
will keep spending and justify pouring money into a bad prior
investment even though evidence shows it is bad.
- [12:43] As your brain gets
overwhelmed your subconscious is more likely to take the reigns,
meaning you will make more battery and present-focused
- [13:47] The
hot-cold empathy gap finds that in a cold state it's much easier to
make better decisions then in a hot state or in the
- [16:01] The reverse is
the cold-hot empathy gap where smokers underestimated their cravings to
smoke when they were in a cold state.
- [17:26] People are impacted
more by losses than gains – and it takes double the joy felt by a
gain to equal the pain felt by a
- [17:52] Dread
aversion – dread results
in double the emotional impact of savoring.
- [20:11] We tend to beef up
the status quo and defend it more than may be warranted
because of system justification.
- [20:33] Due to
normalcy bias and
not wanting to think about change, we may refuse to plan for or
have the proper reaction to a disaster which has never happened
- [21:35] Due to a
zero risk bias, we
will prefer to reduce a small risk down to nothing than taking a
bigger reduction in a larger risk.
- [22:47] Because of
risk compensation or the Peltzman
effect, we are more likely
to take a greater risk when our perceived safety
- [24:26] Because of the
pseudocertainty effect we are more likely to make choices that avoid
risk if the expected outcome is a good one, but seek out risk in an
attempt to avoid a negative outcome. Which could lead to the
ostrich effect or
ignoring a negative situation.
- [26:06] A predisposition toward
viewing the past in a positive way and the future in a negative way
is called declinism.
- [26:21] The
pessimism bias is
to overestimate the likelihood of negative things happening to us
in the future.
- [26:42] A zero
sum bias is where you
think that the only way one person gains is at the expense of
- [27:05] Look for the win win.
For one person to succeed, it doesn't mean that another person has
Negativity bias is
when it's easier for us to remember negative memories over positive
memories. The worse than average effect
is where we believe that we are
worse at tasks than average people are.
- [29:06] Acting like a
confident, optimistic person can create the benefits as if you are
confident and optimistic.
- [29:44] When you know the rules
of the game, it can be easier than you think to trick your brain
into doing more in your favor and using these biases as your
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