Common thinking errors to avoid
When it comes to deciding which stocks to invest in, there is the tendency for some to follow the masses and buy what's most popular.
But one should really take a step back and think independently from the crowd.
That's the advice of Rolf Dobelli, author of The Art Of Thinking Clearly, an international bestseller which looks at the common errors people make in their day-to-day thinking.
Dobelli, 47, who has an MBA and PhD in philosophy, shares his views with My Paper.
Where did you get the inspiration for the book?
It started as notes to myself. I wanted to change my behaviour, so I don't fall into these (thinking) traps all the time. And I hope my readers will do the same. But you have to know, you can't eradicate them 100 per cent.
These thinking errors are so deeply ingrained in our brain.
How do you apply these ideas to your life?
If everybody jumps onto a certain stock, or everyone buys clothes of a certain fashion - that will be social proof. But I'll make better decisions by thinking independently.
Having said that, social proof is not harmful all the time. For example, I visit Singapore, and I'm looking for a restaurant, and I don't know where to go - so I'll look for one which is full of local people.
Which ideas had a big impact on you?
One of my favourites is social proof. I'm very aware now of how the masses can influence my behaviour.
Another favourite is availability bias. We only look at and think about things that are available to us immediately. We don't consider other things that are farther away (from us)...which can also have a big impact.
How do you guard against availability bias?
By not consuming news. Because having news all the time puts me off from looking at what's not there. Now I think - how can I look at the world in a different way?
Why do we have these thinking errors?
Most of our thinking errors are left over from the hunter-gatherer past. Social proof is a very strong leftover.
Because, in the past, when you departed from the common behaviour of the others, you would be expelled from the group.
Once you were a loner out there, you were dead. First of all, you couldn't procreate. Secondly. if you were hunting big animals, you could do it only in groups.
That's why we are such group-driven and group- consensus-driven people.
What's a simple thinking exercise to try out?
The simplest is social proof. Don't follow the crowd, don't copy the behaviour of others. Our behaviour is not better because a lot of people display that behaviour. An opinion is not more right because a lot of people think that way.
The Art Of Thinking Clearly is available at major bookstores for $19.95, inclusive of GST.