Overview

There are dozens of cognitive biases that shape how we think and make decisions, often without us realising. Here are some of the most influential ones, especially in business, strategy, and everyday judgment.

Common Cognitive Biases in Decision-Making

• Confirmation Bias: Tendency to seek out or interpret information in a way that confirms our existing beliefs.

• Anchoring Bias: Relying too heavily on the first piece of information encountered (the "anchor") when making decisions.

• Availability Heuristic: Overestimating the importance of information that comes to mind easily, often because it's recent or vivid.

• Loss Aversion: Preference to avoid losses rather than acquire equivalent gains; losing €100 feels worse than gaining €100 feels good.

• Overconfidence Bias: Overestimating our own abilities, knowledge, or control over outcomes.

• Status Quo Bias: Favouring the current state of affairs and resisting change, even when alternatives may be better.

• Framing Effect: Decisions are influenced by how information is presented e.g., "90% survival rate" vs. "10% mortality rate."

• Endowment Effect: Valuing something more simply because we own it.

• Bandwagon Effect: Adopting beliefs or behaviours because many others do "everyone's doing it."

• Hindsight Bias: Believing, after an event has occurred, that we "knew it all along."

• Dunning-Kruger Effect: People with low ability at a task overestimate their ability, while experts may underestimate theirs.

These biases can creep into everything from product development to hiring decisions to personal relationships.

Business Examples & Strategic Implications

Bias	Description	Business Scenario	Impact
Sunk Cost Fallacy	Continuing a project due to past investment, even if future returns are poor	Persisting with a failing product because of prior R&D spend	Wasted resources, delayed pivot
Confirmation Bias	Seeking info that supports existing beliefs	Ignoring negative user feedback because it contradicts internal assumptions	Poor product-market fit
Anchoring Bias	Overreliance on initial data or numbers	First price quoted in negotiations sets the tone	Skewed pricing decisions
Availability Heuristic	Judging based on easily recalled examples	Overestimating risk due to recent news (e.g., cyberattack)	Misallocation of security budget
Loss Aversion	Fear of losses outweighs desire for gains	Avoiding innovation due to fear of cannibalizing existing products	Missed growth opportunities
Overconfidence Bias	Overestimating one’s knowledge or control	Launching without proper market testing	Failed product rollout
Status Quo Bias	Preference for current state	Not adopting new tools or workflows	Stagnation, inefficiency
Framing Effect	Decisions influenced by how info is presented	“95% success rate” vs “5% failure rate” in marketing	Misleading perception
Endowment Effect	Overvaluing owned assets	Overpricing a legacy product	Reduced competitiveness
Bandwagon Effect	Following the crowd	Copying competitors’ features without validation	Diluted brand identity
Hindsight Bias	Believing outcomes were predictable	“We knew that campaign would fail” after poor results	Blame culture, poor learning
Dunning-Kruger Effect	Low-skilled individuals overestimate ability	Junior team member dismisses expert advice	Risky decisions, team friction

How to Use This in Practice

• Team Workshops: Run a "Bias Spotting" session where teams reflect on past decisions and identify which biases may have influenced them.

• Strategy Reviews: Use this table as a checklist when evaluating new initiatives. Ask "Are we falling into any of these traps?"

• Leadership Coaching: Help managers recognise bias in hiring, performance reviews, and resource allocation.