He was a senior physician who had been practicing medicine before some residents were born. Too often, he had seen them quickly and incorrectly diagnose a case based on their initial impression. Through decades of experience, he had learned to expand his horizons, seek more clues, ask more questions, listen more carefully and curiously, and then order tests based on additional information and his informed hunches.
I didn’t hear the doctor in the hospital. I heard him in a classroom. He was coaching and training non-medical leaders on how to make better choices. The ER doctor had earned credibility with us not because he had served thousands of patients but because we respected his wisdom and discernment. He had extracted hard and costly lessons in the medical arena and had vowed to minimize future mistakes by himself or those he could influence.
The doctor had crystallized a principle and conveyed it to laypeople to help them make wiser life choices. As the doctor spoke, I recognized that my brokerage and coaching clients would benefit from his sound counsel.
Confirmation Bias
We develop hunches or have expectations about what might be true, what we hope for, or what we fear. We tend to seek some pattern and then jump to a convenient conclusion. After having picked a theory, we tend to seek evidence that supports the notion. This common thinking weakness is called “confirmation bias.”
Confirmation bias leads you to ignore facts that contradict your initial assumption and/or beliefs. We discount evidence implying other patterns. We unconsciously yet systematically ignore information that might lead to a better diagnoses, results and facts.
An Example of Confirmation Bias
Our income property brokerage team serves millionaires. Millionaires are smart about money but are not necessarily brilliant or wise about decision-making. Many investors make assumptions about the people or the property with little or no evidence. They actively search for details or clues that support their theory. Worse, they discount, disregard, or ignore bigger chunks of data contradicting their pet notion.
An investor eager to move forward might discount factors pointing to additional risk and dwell on those pointing to more potential advantages. That doesn’t remove or mitigate the actual risk. In layman’s terms, wishing doesn’t make it so. Ignoring the red light is folly, even if you wish it was green.
Neutralizing Confirmation Bias
A robust analysis increases the chance of making a wise choice. Time and research reveal new information. The data discovered can reveal new risks and/or previously unconsidered opportunities.
A thinking partner can reduce the risk of confirmation bias. Ask a wise person to look over your shoulder or listen to you as you talk through a problem. President Lincoln had a wise friend, Noah Brooks, who listened to him but did not comment on the issue at hand. More than once, Lincoln shook his friend’s hand and then left having clarified his thinking… without any suggestion from his friend.
You can also be your own thinking partner. Dwight Eisenhower would write detailed memos to himself where he analyzed an issue and all the available information. He called these memos to himself “Concerns of a Commander.”
You can minimize your risk by being curious about other facts, motivations, or interpretations and talking with people with diverse backgrounds, skills, or training. Cultural, experiential, and mental diversity matters more than merely racial diversity in reducing risks. This broader diversity brings greater mental and emotional robustness. People who have experienced other cultures have a broader understanding of what is possible; they have thought outside their first box.
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Now it’s your turn. What has been your experience with confirmation bias?
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Terry Moore, CCIM, is the author of Building Legacy Wealth: How to Build Wealth and Live a Life Worth Imitating. Read his “Welcome to My Blog.”