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How Cognitive Bias Can Affect Buying Behaviour

How Cognitive Bias Can Affect Buying Behaviour

A cognitive bias is a limitation in rational thinking caused by the tendency for the human brain to take short cuts to save energy.

It is now firmly established that, as a species, humans have more than 100 hard-wired cognitive biases. But we’ve been unaware of them for at least the last 35 million years. So now that we do know about them, simply deciding to overcome them is simply not going to work. We need better ways to manage and avoid these potentially damaging mental pitfalls.

What is a cognitive bias?

A cognitive bias is an error in judgment occurring when a person is interpreting information in the world around them.

They are mental habits - rules of thumb - that help us make sense of everything around us and reach purchasing decisions with relative speed and minimal mental effort. It’s a way of thinking that is very common and might even appear rational but in fact gets in the way of reasonable decision making. An important aspect of cognitive bias is that it affects decision-making, and not always positively.

We view cognitive biases as coping mechanisms that allow the brain to process vast amounts of input. While the mechanism is very effective, its limitations cause errors in decision-making. The brain is powerful but is limited. It often creates biases by simplifying information and letting you make decisions quickly.

Man stood contemplating which path to take
Without mental shortcuts, we'd spend our whole lives deliberating over decisions!

Some of these biases are related to memory, which is fallible for a number of reasons, and this can lead to biased thinking and decision-making. Because of this, subtle biases can creep in and influence the way you see and think about the world.

As shoppers and consumers, we all suffer from systematic errors in thinking, known as cognitive biases, that affect purchasing decisions and brand judgment.

Signs of cognitive bias at play

Every person experiences cognitive bias to some degree. It is easier for others to catch it in you, but it is important for you to understand that biases have a way of affecting your own thinking as well. Some signs that a heavy bias might be influencing your thoughts include the following:

  • Taking credit for your own successes but denying other people's accomplishments, often claiming they are down to luck
  • Blaming outside factors when things don't go your way
  • Assuming that other people share your opinions or beliefs
  • Presuming that you know everything about a topic after learning only a little
  • Only paying attention to stories that confirm your opinion

Whenever we make judgments or decisions about the world around us, we like to think that our judgment is fair and logical. However, sometimes biases trip us up and lead to bad decisions or poor judgments.

3 top types of cognitive bias

  1. Anchoring bias: This is the tendency to rely too heavily on the very first piece of information you learn, also know as the Anchoring Effect. For example, if you hear that the average car price is a certain value, you will think any car for less than this is a good deal - but really it might be better to search out some better deals. You can set other people's expectations by putting.
  2. Attentional bias: Humans are prone to paying attention to some things while ignoring others. For example, when you're deciding which car to buy one of your top criteria may be the look and feel of the outside (e.g., it's sleek and stylish) but you may not pay much attention to other important statistics such as safety record or gas mileage.
  3. Confirmation bias: This bias cognitively favours information that conforms to one's existing beliefs and discounts evidence that does not.
Examples of confirmation bias such as showing preference to things that support your own beliefs. Image credit to Very Well Mind.
[Image source]

Why do cognitive biases exist?

When faced with decisions, people often rely on mental shortcuts to quickly arrive at a solution. The complexity of the world and the amount of information in it means that people occasionally need quick answers to questions or they literally cannot function.

Cognitive biases are caused by mental shortcuts. Sometimes, these cues can be accurate, but other times not so much. We create mental shortcuts, known as heuristics, which can be influenced by:

Psychologists suggest that many of these biases serve an adaptive purpose; they allow us to reach a decision quickly when faced with a dangerous or threatening situation. Much like an 'animal instinct', if you like.

Illustration showing a caveman being chased by a bear vs an evolved human being chased by ideas. Image credit to Future Self
[Image source]

For example, imagine you are walking down a dark street. You spot a shadow, and assume someone dangerous is following you - you want to get out of the alley. That shadow could have simply been a flag waving in the breeze but your mental shortcuts allowed you to react quickly to escape a potential threat, even if they are not always accurate.

Ultimately, your brain is trying to protect you. Your brain will see any threat as a physical one when it's really just psychological.

Cognitive biases with System 1 and System 2 thinking

As humans, we are blessed with an intuitive internal stranger that is System 1 thinking. The challenge this poses is profound. It is human nature to make mistakes, and just because we are now aware of this limitation, doesn’t mean we can prevent the mistakes from happening.

What can we do? We need to accept us as we are. The good thing about being a human is that we also have a deliberative part of our brain: System 2.

Brain sketch showing 97% of decisions made quickly and subconsciously, vs 3 made slowly and logically
The vast majority of decisions are made quickly using System 1

For the first time in human evolution, behavioural science has discovered that our slow, deliberative System 2 mind has realised that there is a much faster, more powerful System 1 in existence.

With that realisation, we can transform the way we retail; we can shape package design and improve shopping experiences, both in-store and online. We are now for the first time in a position to create retail that allows shoppers to make better decisions. This is the first time in evolution this has happened.

But what we all have to decide is whether we want the decisions shoppers make to benefit them or to be for the good of the retailers and brands competing for share of spend. Frankly, embracing behavioural science and shopper psychology has the power to do both!

How to use cognitive biases in retail

Humankind has achieved a lot, despite all of these cognitive biases. Now that we are aware of them, we can design our stores and websites to neutralise their effect. If we want to avoid buyer’s remorse, we have to reshape the retail environments around us rather than hope to change ourselves.

Brands, retailers, marketers and designers now need to call on the expertise of behavioural science if they are to best meet the newly discovered needs of shoppers and consumers. If you’d like to know more about how shoppers really think, and how you can cater to their cognitive biases, ask me.

Humans are limited, we’re not perfect and we are irrational in many ways. But for the first time, we now have the opportunity of building retail that helps shoppers and consumers to make better decisions. Be that based on financial, health or whatever, that’s my hope.

And as shoppers, by accepting our inner stranger, we will come to a better understanding of our own minds, as well as those of others, and as a result, become more effective at shopping.

Summary

I think it is important to be aware in general of where human beliefs come from. If we think we have reasons for what we believe, that is often a mistake. Our beliefs, our wishes and our hopes are not always anchored in reasons, they are anchored in something else that comes from within and is different. Daniel Kahnemann

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About Phillip Adcock

My name is Phillip Adcock: I have more than 30 years of human behavioural research and analysis, and have developed a unique ability to identify what it is that makes people psychologically and physiologically 'tick'.

Would you like to know more about how shoppers and consumers think? Download my FREE guide now. Alternatively, check out www.adcocksolutions.com, where there are more FREE downloads available there. Or why not simply email me with what's on your mind?

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Phillip Adcock
Psychology & Behaviour
Change Consultant

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