Why Gut-Decisions Beat Agonising Over Business Data

The unconscious, or gut instinct, can do just as well as a conscious, deliberate decision in the business environment.

The unconscious, or gut instinct, can do just as well as a conscious, deliberate decision in the business environment.

Instinctive, gut decisions may be just as good as those based on data, a study suggests.

Managers who rely on gut instinct to make decisions about new projects are just as likely to be right as those relying on the data, the research found.

However, relying on gut instinct is much faster, as data analysis typically takes a long time.

Think or blink?

Malcolm Gladwell wrote a well-known book called ‘Blink‘ about the power of the unconscious to make complex decisions in the blink of an eye.

However, since then studies have failed to back up the idea that the unconscious can outperform the conscious mind.

Still, there is evidence that the unconscious, or gut instinct, can do just as well as a conscious, deliberate decision.

And as this study underlines, sometimes gut decisions have other benefits, such as speed and requiring fewer resources.

The study comes at a time when 92 percent of companies are investing in data initiatives, which might prove unnecessary.

About the study

For the research, 122 managers in digital, advertising, publishing and software companies were asked about how they decided to allocate resources to new projects.

Among the ways they reported making decisions were:

  1. Majority: making the choice that most people wanted.
  2. Experience: going with the option that the most experienced individual preferred.
  3. Tallying: choosing the option with the most positive points.

The results showed that managers often relied on a ‘tallying’ approach more than other methods.

More analysis did not provide much of a boost to accuracy in decision-making and took considerably longer, the results showed.

Using instinct and rules of thumb, like tallying positive points, was just as accurate as more data analysis.

Dr Oguz A. Acar, study co-author, said:

“This research shows that data-driven decision-making is not the panacea in all situations and may not result in increased accuracy when facing uncertainty.

Under extreme uncertainty, managers, particularly those with more experience, should trust the expertise and instincts that have propelled them to such a position.

The nous developed over years as a leader can be a more effective than an analytical tool which, in situations of extreme uncertainty, could act as a hindrance rather than a driver of success.”

The study was published in the journal Psychology & Marketing (West et al., 2021).

The Confirmation Bias: Definition And Examples

The definition of the confirmation bias in psychology is that people search for information that confirms their view of the world and ignore what doesn’t fit.

The definition of the confirmation bias in psychology is that people search for information that confirms their view of the world and ignore what doesn’t fit.

The confirmation bias is the fact that people search for information that confirms their view of the world and ignore what doesn’t fit.

In an uncertain world, people love to be right because it helps them make sense of things.

Indeed, some psychologists think it’s akin to a basic drive.

What is the confirmation bias?

One of the ways they strive to be correct is by looking for evidence that confirms they are correct, sometimes with depressing or comic results:

  • A woman hires a worker that turns out to be incompetent. She doesn’t notice that everyone else is doing his work for him because she is so impressed that he shows up every day, right on time.
  • A sports fan who believes his team is the best only seems to remember the matches they won and none of the embarrassing defeats to inferior opponents.
  • A man who loves the country life, but has to move to the city for a new job, ignores the flight-path he lives under and noisy-neighbours-from-hell and tells you how much he enjoys the farmer’s market and tending his window box.

We do it automatically, usually without realising.

We do it partly because it’s easier to see where new pieces fit into the picture-puzzle we are working on, rather than imagining a new picture.

It also helps shore up our vision of ourselves as accurate, right-thinking, consistent people who know what’s what.

Psychologists call it the confirmation bias and it creeps into all sorts of areas of our lives.

Here are a few examples of the confirmation bias:

 1. Confirmation bias in self-image

“Hey, you look great, have you done something different with your hair?”

Who doesn’t like a compliment? No one. It doesn’t even have to be sincerely delivered, I’ll take it. But what about…

“Hey, you’re a real slime-ball, you know that?”

Who likes insults? Well, we don’t exactly like them but—believe it or not—sometimes we seek them out if they confirm our view of ourselves.

In a study that examined this, people actually sought out information confirming their own view that they were—not exactly slime-balls—but lazy, or slow-witted or not very athletic (Swann et al., 1989).

And this isn’t some kind of self-hating thing; in this study even people with high self-esteem sought out information that confirmed their own negative self-views.

It seems we like to be right, even at a cost to our self-image.

2. Finance example

A study of online stock market investors has looked at how they gathered information about a prospective stock (Park et al., 2010).

The researchers found the confirmation bias writ large.

Investors mostly looked for information that confirmed their hunch about a particular stock.

Those people who displayed the strongest confirmation bias were the most over-confident investors and consequently made the least money.

It seems we like to be right, even if it costs us money.

3. Politics example

People see what they want to see in politics all the time.

The most ironic example is in satire.

Often satire uses sarcasm to make its point: TV satirist Stephen Colbert frequently says the opposite of what he really thinks to make his point (amongst comedians I believe these are called ‘jokes’).

Except the irony is that one study has shown that people who don’t agree with Colbert don’t get that he’s being sarcastic, they think he really means it (LaMarre, 2009).

The beauty is that both liberals and conservatives get what they want: their viewpoints confirmed.

It seems we like to be right, even if it means not getting the joke.

4. Healthcare examples

Despite what many nurses believe, the full moon is NOT linked to busier hospital emergency rooms or more births (Margot, 2015).

The belief that there might be a link is likely down to the confirmation bias.

Despite the belief being remarkably common in hospitals, the study, published in the journal Nursing Research, found no evidence for it.

Similarly there’s NO evidence that the moon has any influence on:

  • automobile accidents,
  • hospital admissions,
  • surgery outcomes,
  • cancer survival rates,
  • menstruation,
  • births,
  • birth complications,
  • depression,
  • violent behaviour,
  • or even criminal activity.

Blame it on the confirmation bias

Over the years the confirmation bias has picked up the blame for all sorts of dodgy beliefs. Here are a few:

  • People are prejudiced (partly) because they only notice facts which fit with their preconceived notions about other nations or ethnicities.
  • People believe weird stuff about flying saucers, the JFK assassination, astrology, Egyptian pyramids and the moon landings because they only look for confirmation not dis-confirmation.
  • In the early nineteenth century doctors treated any old disease with blood-letting. Their patients sometimes got better so doctors—who conveniently ignored all the people who died—figured it must be doing something. In fact for many ailments some people will always get better on their own without any treatment at all.

Fight the bias

The way to fight the confirmation bias is simple to state but hard to put into practice.

You have to try and think up and test out alternative hypothesis.

Sounds easy, but it’s not in our nature.

It’s no fun thinking about why we might be misguided or have been misinformed. It takes a bit of effort.

It’s distasteful reading a book which challenges our political beliefs, or considering criticisms of our favourite film or, even, accepting how different people choose to live their lives.

Trying to be just a little bit more open is part of the challenge that the confirmation bias sets us.

Can we entertain those doubts for just a little longer?

Can we even let the facts sway us and perform that most fantastical of feats: changing our minds?

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Precrastination: Why People Complete Tasks Early When There’s No Need

Precrastinators may answer an email too quickly or submit a report too early with too little information.

Precrastinators may answer an email too quickly or submit a report too early with too little information.

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Allowing The Mind To Wander Is More Pleasant Than We Predict (M)

Most people dislike spending time alone thinking and predict it will be unpleasant.

Most people dislike spending time alone thinking and predict it will be unpleasant.

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People Who Write Well Do This One Simple Thing

The method could benefit people using computers, pen-and-paper or even speech-to-text.

The method could benefit people using computers, pen-and-paper or even speech-to-text.

Forcing yourself to type slower could improve the quality of your writing, a study finds.

Participants in the study who typed with only one hand produced higher quality essays, researchers found.

Mr Srdan Medimorec, the study’s lead author, said:

“Typing can be too fluent or too fast, and can actually impair the writing process.

It seems that what we write is a product of the interactions between our thoughts and the tools we use to express them.”

People who type quickly may use the first word that comes to hand.

Slowing down allows the mind more time to find the right word.

This could be why forcing yourself to slow down a little improves the sophistication of vocabulary used.

Professor Evan F. Risko, who co-authored the study, said:

“This is the first study to show that when you interfere with people’s typing, their writing can get better.

We’re not saying that students should write their term papers with one hand, but our results show that going fast can have its drawbacks.

This is important to consider as writing tools continue to emerge that let us get our thoughts onto the proverbial page faster and faster.”

Slowing down your writing could help writing quality no matter what input method is used, the authors think.

The same trick could benefit people using pen-and-paper or even speech-to-text.

Slowing down too much, though, can be detrimental.

When people slow to below the rate of normal handwriting, their quality gets worse, previous research suggests.

The study was published in the British Journal of Psychology (Medimorec & Risko, 2016).

The Bad Words That Make You Stronger And More Confident (M)

Participants in the study were able to perform more push-ups after repeating these words.

Participants in the study were able to perform more push-ups after repeating these words.

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The 4 Ways That People Lie To Themselves (M)

Psychologists think that one of the main reasons people deceive themselves is to remain motivated in difficult situations.

Psychologists think that one of the main reasons people deceive themselves is to remain motivated in difficult situations.

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