Cognitive Biases and Heuristics

The science of how people think and make decisions, and why that matters for your demo or presentation

How people think and behave impacts how they perceive your demo or presentation

In the words of the late, great Jim Morrison, “People are Strange.” Or, as Agent K of the Men in Black said, “People are dumb, panicky, dangerous animals and you know it.”

Whichever school of thought you subscribe to, I think we can all agree that people are often unpredictable and irrational. The study of this irrationality is known as Behavioral Economics, and it was pioneered by professors Daniel Kahneman and the late Amos Tversky. Prof. Khaneman won the Nobel Prize in Economics “for having integrated insights from psychological research into economic science, especially concerning human judgment and decision-making under uncertainty.”

Traditional economics assumes rationality – that we will behave in predictable ways and mostly try to maximize our “subjective utility.” Basically, we will try to get what we want in a way that satisfies whatever desire we have. But Profs. Khaneman and Tversky came to the conclusion that there is a massive flaw in this worldview, because people aren’t rational. They then set out to document the biases we all have, as well as our “heuristics,” or mental shortcuts we use to make decisions.

How people think and behave impacts how they perceive your demo

In the words of the late, great Jim Morrison, “People are Strange.” Or, as Agent K of the Men in Black said, “People are dumb, panicky, dangerous animals and you know it.”

Whichever school of thought you subscribe to, I think we can all agree that people are often unpredictable and irrational. The study of this irrationality is known as Behavioral Economics, and it was pioneered by professors Daniel Kahneman and the late Amos Tversky. Prof. Khaneman won the Nobel Prize in Economics “for having integrated insights from psychological research into economic science, especially concerning human judgment and decision-making under uncertainty.”

Traditional economics assumes rationality – that we will behave in predictable ways and mostly try to maximize our “subjective utility.” Basically, we will try to get what we want in a way that satisfies whatever desire we have. But Profs. Khaneman and Tversky came to the conclusion that there is a massive flaw in this worldview, because people aren’t rational. They then set out to document the biases we all have, as well as our “heuristics,” or mental shortcuts we use to make decisions.

Behavioral economics, biases and heuristics – learning how people think and behave, and how that impacts your demo

Here is a list of various biases and heuristics that we all have, and information about how they impact your audiences’ perceptions of your demos and presentations. Keep checking back as we are constantly updating this list.

Want us to cover a particular bias not on this list? Let us know!

Bias/HeuristicWhat is it?
Ambiguity effectWe avoid options where the probability of a good outcome is unknown (or ambiguous)
AnchoringWhen we lock onto a particular piece of information for comparison – i.e. the first number tied to the deal
Confirmation biasOur tendency to seek out information that confirms what we already think
The curse of knowledgeWe have a hard time thinking about things from the perspective of someone who knows less than us
Dunning-Kruger effectWe overestimate our skills for things we’re not good at, and we underestimate our skills for the things we are good at
Empathy gapWe tend to underestimate the influence emotions have on ourselves and on others
Expectation biasWhen testing something, we believe information that supports our beliefs for what should happen and ignore or minimize information that contradicts our expectations
Focusing effectWe tend to place too much importance on a particular aspect of something that we decide is important
FramingThe way the information is presented has a profound impact on how we interpret it
The Gambler’s fallacyWe think that future probabilities change based on things that happened in the past, even when one thing doesn’t impact the other
GroupthinkWe want to get along with others in our group, so we may “go along to get along,” even if we don’t like the decision
IKEA effectWhen we take part in the construction or assembly of something, we tend to value it higher
Negativity biasWe remember bad things more easily and intensely than good things
Parkinson’s law of triviality – aka “bikeshedding”We give more weight to things we understand, and tend to avoid really complex things
PareidoliaWe see patterns when they aren’t there, and once we see them, we can’t unsee them (think “this potato chip looks just like Elvis”)
Pygmalion effectWe think that others’ expectations will impact how someone performs
Rashomon effectWe remember things through our own perspective, which may or may not match what actually happened
Rhyming effectWhen we’re rhymin’, people don’t think we’re lyin’ (I think Johnnie Cochran said that)
Sunk cost fallacyWe “throw good money after bad” to justify a potentially bad decision

Want to learn more? Here are a few books that contain great information about this topic*:

*Demo Solutions strongly believes in supporting positive businesses, which is why we aren’t linking to Amazon but instead to libro.fm. Libro is a audiobook site that directly supports local booksellers with each purchase. When you sign up, you can select the a bookstore that you would like to support. At Demo Solutions, we support Booked, a wonderful kid-focused bookstore in Evanston, IL. Please note that links include our referral code, but we don’t make any money off these links (just the occasional free audiobook) as we would rather it go to independent bookstores.