Here are the seven cognitive biases. Which are the dominant ones for you?

1. Status Quo Bias:

It is natural to want to preserve the status quo and, human nature being what it is, we tend to defend the dominant logic against a model that is new but conflicting. It is important to understand that this does not necessarily imply being afraid of change.

2. Centre-stage Effect:

Present many enough people with three options and majority are most likely to go for the middle course. This is true for almost all cultures; generally most people don’t like extremes.

3. Anchoring:

Once a number (however random) has been suggested, most future alternatives get measured by it. Experienced salesmen are well aware of this pathology: so they almost always start by showing the customer a product version with all extras. Once its high price lodges in the customer’s mind, subsequent other versions of the product by perception seem cheaper.

4. Sunk Costs:

Even when a company has not managed to capitalize on an innovation, it is much easier to abandon a N5,000,000.00 project already commenced than a N30,000,000.00 one already commenced.

5. Frequency Effect:

The more frequently we hear a fact, the more likely we are to believe it. People will often willingly believe even the ridiculous, just because they have heard them over and over again. Letting go of indoctrinated ideas is incredibly difficult.

6. Zero-risk Bias:

Where a relatively small risk is totally eliminated, call that Option A, it will be preferred to Option B where a much larger risk is merely reduced even if drastically. This is true even if the expected value of Option B is greater than Option A. In other words, most people are ready to give up a whole lot for a sense of total security. A new business model with a high net present value will often be seen as more risky than investing in the existing assured business.

7. Bandwagon Effect:

This is the power of peer pressure. Humans have a tendency to follow the herd. As long as there are no dissenting voices or if the boss has presented a matter convincingly, most persons will jump on the bandwagon despite having personal doubts.

                        Source: THE BUSINESS MODEL NAVIGATOR

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