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Ricardo (4s): Hello, everyone. Welcome to the five minutes PM podcast today. I like to talk about Cognitive Bias what is it a cognitive Bias? It's a mistake an irrational mistake that you make or you or anyone can make while making decisions. It's a natural deviation from a rational mathematical organized decision-making process. And let me explain why this happens. This happens because imagine during your day, how many times your brain needs to process information. Imagine since the time you walk up and brush your teeth up to the time you wear your pajamas and go back to imagine how many people you see, how many people you talk to, how many emails you answer.
Ricardo (52s): So this amount of information is absolutely overwhelming for the brain. So what does that bring do over time with experience the brain, you start making shortcuts and the shortcuts aim to increase speed and reduce the usage of your brainpower. This will speed up your process. And this is what is technically called a heuristic. But the problem is that when you make this kind of shortcuts, there is a quite good chance that you started doing some mistakes on that because your brain when doing the shortcut may drive you towards a reaction or to a decision that it's not a fully rational decision.
Ricardo (1m 39s): So let me give you a couple of examples. Let's suppose you are in a restaurant and you have two glasses. One is tall and the other one is short, it let's suppose that the shorter GLAS is much wider than the tall one. But what happens with your brain, your brain automatically takes the tall one. Why? Because your brain usually does a direct relationship between the height of the glass and the volume. So a tall glass, more liquid inside. And this is not necessarily true because it depends on the volume and not the height, but your brain did this shortcut to You.
Ricardo (2m 22s): And this, let me tell you, I'm not saying that this is all bad. For example, when you were driving a car and you see a red light, you just stop. And this is absolutely amazing, right? You don't need to learn and process because sometimes you don't have time to react. You just need to create something automatic. Remember, for example, the last time you took a shower, many of us, we will not even remember what happened. You know, how you'd pick up the soap or the shampoo. It just happened because, what it, with the experience, your brain just creates an automatic process for that, but sometimes these create challenges.
Ricardo (3m 3s): Daniel Kahneman and Amos Tversky are too great. scientists' on this field. This created a whole discipline called economic behavior. So what, how you connect psychological effects to economic decisions? So why do people buy some products and do not buy others? So maybe the packaging. How do you create a package that tries to trick, please, I'm not saying only in a bad sense, but try to trick your brain and make you decide for a product, A instead of a product B. So let's suppose two products one costs 99 cents and the other costs $1. Why do people put 99 cents?
Ricardo (3m 45s): Imagine in practical terms to give you change in this, it doesn't make sense but why people do that? Because the brain has a shortcut because we read numbers from left to right. I'm talking most of us. So when we read from left to right, we see zero against one, and then you make a decision, Oh, this is cheaper people don't go to the second decimal place to check that a difference is just one cent. So you sell more. If you charge the 0.99, then the round number up. So it doesn't make sense. But it just happens because it's like a trick with our brain.
Ricardo (4m 25s): So we may drive our decisions based on love. For example, you like some kind of people or you're like someone, then you may change your rational decision based on this love. And sometimes you don't take a rational decision. Second anchoring in what is that? It's when for example, you started in a negotiation, and then you put the first value for buying or selling something. This number becomes an anchor to, the whole negotiation. Why? Because it's exercise a Bias and drives you to that number.
Ricardo (5m 6s): So for example, did you see when people get lost in a forest, they tend to walk in circles. Why that? Because of the anchoring that the first point made on them. Another aspect is confirmation bias. For example, let's suppose I believe that some kind of vegetable can make you sick and then everything that happens around the consumption of that vegetable. I will immediately associate with that. So let's suppose if you eat that and get sick, I will immediately say, Oh this is because of that.
Ricardo (5m 45s): Magical. I have no proof. There is no rational behavior drive in that, but because I am so keen to prove my point that I become blind on my Decisions. Next week I want to give you a very playful, an interesting example called the birthday paradox. We always believe that our date and month fourth birthday is quite unique. It's not very common to have two, three people with birthdays, the same date. So I wanted to show you a rational model showing that most of the time you're feeling is wrong. And then afterwards I want to talk about the Dunning Kruger effect and the imposter syndrome, all of them affect massively.
Ricardo (6m 34s): The way people make decisions and making decisions is your role. As a project manager, as a scrum master or as a developer, as any professional, you need to understand how you can get the bias out and make a clean rational decision. This is very easy to say, but very hard to make it happen. So see you next week with the continuation of this series about Cognitive Bias.
