The Setup

Bias, a tendency to favor one perspective based on preconceived notions, can negatively impact individuals and groups, as well as decision-making and problem-solving. It can lead to discrimination, unfair treatment of individuals or groups, and serious consequences. Bias makes one consider incomplete or inaccurate information and prevents you from considering different perspectives and options.

That is why managing bias is vital to promote fairness and equity. Decisions and problem-solving don’t just deserve accurate and complete information—they require it. Becoming aware of your biases and taking steps to address them is needed now more than ever.

The Approach

• Recognize that we overestimate the likelihood or importance of things that are more easily remembered or readily available in our minds while underestimating the likelihood or significance of things that are less familiar or more difficult to recall.
• Notice that market forces are volatile and can change direction quickly. So, it’s important to be rational and objective. In other words, see the forest for the trees when evaluating investment decisions and their potential return.
• Take it slow when listening to a compelling narrative, as humans select and emphasize certain pieces of information and downplay or ignore others. Conclude and make judgments when the evidence supports them.
• Be cautious and conscious of your words and knowledge. Just because you have an opinion doesn’t mean you have to provide it—especially where one lacks the depth of understanding.

​The Latticework

• The Availability Heuristic is a cognitive bias that refers to the tendency to base judgments on the ease with which information comes to mind rather than on a more objective data analysis.
• Mr. Market is a concept from investing that suggests that the stock market can be thought of as an emotional and irrational person. It’s an investor’s job to evaluate a company’s intrinsic value and make decisions based on that rather than being swayed by Mr. Market’s emotional or irrational behavior.
• Narrative Fallacy is the tendency to construct a coherent narrative or story to explain an event or sequence of events, even when the information is incomplete or conflicting, and to believe that the narrative accurately represents reality.
• Twaddle Tendency refers to a disposition to favor or produce low-quality, superficial, or nonsensical content or communication.

​The Deep Dive​​

​Availability Heuristic​
Several related situations or events will immediately spring to mind when making a decision. Naturally, we perceive those situations as more likely than others, and as a result, folks overestimate their probability of occurrence. Our minds favor ease of recall and retrievability: The recency of a thought or memory magnifies its significance. Compelling narratives spark an emotional reaction and are ingrained into memory. The heuristic leads to poor choices because utilizing the first thought that comes to mind is insufficient. By prioritizing low-quality information, you end up informing the incorrect decision. It’s easy to be swayed by what our mind recalls first, especially when it has made a big impression on you. Emotions, expectations, and beliefs influence which thoughts or memories bubble up when deciding. Say, for example, that you survived a hurricane; you might think the odds of enduring another are higher than they are statistically. How we retrieve information is biased and limited by how memories are made and highlighted in our minds — unconsciously influencing judgments. On the one hand, it’s sometimes helpful for the mind to arrive at conclusions quickly, but that doesn’t make an unsubstantiated hunch correct.

​Mr. Market​
Mr. Market is a fictitious investor whose illogical and conflicting reactions to the stock market represent the trappings of groupthink. He is driven by emotions and moods instead of analysis. Like a pendulum, he randomly swings between optimism and pessimism and is triggered easily. When he’s happy, prices are high, and when miserable, prices are low. This type of investor composes much of the stock market, and the market mirrors their collective actions. Mr. Market is a helpful archetype who personifies herd mentality and displays faulty logic. While the stock market fluctuates, it’s necessary to have a firm grasp of the big picture. Since Mr. Market is prone to emotional upheavals, he might present you with a high price in a state of euphoria, believing you’d want to rob him of immediate gains. Conversely, he could offer you a low price when he’s sad, fearing you’d dump your interest on him. Notably, Mr. Market doesn’t care if you ignore him, and the next day, invariably, he will present you with a new quote. If you know what you want and stay anchored to the fundamentals, you can choose when is the best time to transact.

​Narrative Fallacy​
Humans perceive experiences as stories in a structured sequence. But narratives are limited by how they derive meaning from reality. The narrator weaves fact into fiction by creating a logical order that describes an event, however genuine the story may seem. While stories are a powerful mechanism for understanding the world and remembering situations, they can incorrectly lead folks to think they know more than they do. Reality is full of information and would be nearly incomprehensible without stringing narratives together. Try recounting something that happened, and the impulse to tell a story will naturally occur — it’s innate. Stories reduce complexity and order chaos, whether poems, podcasts, fables, myths, films, shows, novels, etc. The problem with the best stories is how cleanly they deliver a message that can immediately be incorporated into your views. It provides an unearned sense of confidence without deep knowledge, essential details, or facts.

​Twaddle Tendency​
An inclination to speak or write foolishly, espousing nonsense. The difficulty with relating trivial information is that it can lead to performing meaningless actions and negatively impact those doing meaningful work. So, if you have nothing to say, don’t say anything. Peeling back the onion reveals how bad poorly formed ideas can be. Sometimes you may absorb content that seems to have value, at least on the surface. Depending on how invested you become, you internalize those words and even translate them into actions — that’s a lot of waste. For example, someone devours a fascinating leader’s ideology and subsequently writes and tells anyone who listens to them about their discovery. After the wool is pulled from their eyes, they might notice the error has caused misinformation and a focus on the wrong problems or solutions. Identifying when someone is exhibiting twaddle behavior or catching yourself before you fall prey to it helps navigate a complex world requiring more signal and less noise.