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Tag: confirmation bias

Confirmation of Confimation Bias

Confirmation of Confimation Bias

Although I have written many times about different kinds of biases, the one I find most common, even in my decision making, is his confirmation bias. An article I recently came across, Confirmation Bias: Why You Make Terrible Life Decision by Nir Eyal, confirmed to me what I suspected, confirmation bias is more pervasive than most people realize. Confirmation bias is where people pick out anecdotes or facts that support their belief, while neglecting conflicting evidence.

I see if often in the games industry, you want to add a new feature (say a chat system) and you point to three products with chat systems that are highly successful. You do not look at the ten products with chat systems that have failed. Maybe you are looking to build a new product and you want to license an expensive IP. You justify it by pointing to the revenue that Kim Kardashian’s game generating while not including in your calculation the 20 branded games that failed.

This problem is not limited to the game industry. You may believe that social democracy is the best path forward for a country and you use Sweden, Norway and the Netherlands to confirm your belief, while not noticing Cuba, Greece and Spain. Or you believe free markets are the answer and confirm this by looking at Singapore, Taiwan and the US while not noticing Sweden, Norway and the Netherlands. Sometimes people knowingly pick the cases that prove their point, however, confirmation bias is when they sub-consciously accept the evidence that supports their beliefs.

Data is not the panacea

Using data rather than emotions appears as a vaccine against confirmation bias but data can contribute to the problem. Analysts suffer from the same biases as other people and will often look at the data that confirms their hypothesis.

You may have launched a new product that has a strong LTV and is growing rapidly, surpassing your existing product. One analyst who belongs to the team that launched the new product might look at the retention and monetization metrics and compare them with the original product. These KPIs are higher in the new product so the analyst recommends marketing funds shift from the older product to the new product. An analyst on the team for the existing product might identify that shows that total revenue (new plus old product) is flat since the launch of the new product, despite additional marketing spend on the new product. They might argue that the new product is simply cannibalizing the existing product. The better KPIs of the new product are a result of the best users moving to the flashy new toy, not a fundamentally better product.

Depending on the analyst’s initial partiality, they will either investigate and then present the first or second data set. Neither data is incorrect but the conclusion and actions they lead to are very different. Even though both analysts are being honest and believe they are objective, confirmation bias is driving their analysis.

Confirmation bias can impact career decisions

Confirmation bias is not only prevalent in deciding what decisions to make in business but also how to manage your career. You might feel your company is not treating you fairly. Then when two colleagues get large bonuses and you do not, it confirms that you are being treated unfairly. The data you may not be considering is that you are on a higher compensation level already or had received a bonus six months ago.

You also may be considering moving to a competitor. You have met people at a trade show from the other company and they mentioned some of the great perks. You interview and are then offered a position. Before accepting, you see some negative reviews on Glassdoor. You have already decided that you want the new job so you convince yourself the reviews have to be from a different business unit or boss. When you get to the new job, you learn the problems are real.

How do you fight confirmation bias

Slide1

Given the prevalence of confirmation bias, it is important to create a strategy to combat it. A recent article, Facts Don’t Change People’s Minds, Here is What Does by Ozan Varol, provides some great suggestions:

  • Do not feel your beliefs create your identity. Do not get defensive when someone questions you or your project. The data is not personal and you are not a better or worse person if your hypothesis is wrong.
  • Develop better empathy. If someone disagrees with you, it is because they think they are correct. Understand why they are disagreeing and be open to them being potentially correct.
  • Get out of your echo chamber. As Varol writes, “make a point to befriend people who disagree with you. Expose yourself to environments where your opinions can be challenged, as uncomfortable and awkward as that might be.” Seek out data that disproves your position.

Additionally, I have found pre-mortems a very useful tool to combat confirmation bias. A pre-mortem is a meeting held before a major decision where all those involved in making the decision imagine themselves six or twelve months after the decision was taken, assume it turned into a debacle, and then explore why it was a disaster. This type of meeting forces you to look at contradictory facts and raise potential problems.

It is important to be cognizant of confirmation bias and seek out all the information before making important decisions. Most importantly, look at contradictory information and do not discount it because it does not support your position.

Key takeaways

  • Confirmation bias is where people pick out examples or facts that support their belief, while neglecting conflicting evidence.
  • Being data driven does not avoid confirmation bias, as people gravitate to the data that supports their beliefs.
  • To combat confirmation bias, do not equate your beliefs with your identity, understand why others have different positions, seek out non-confirming data and do a pre-mortem for important decisions.

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Author Lloyd MelnickPosted on November 5, 2019October 13, 2019Categories General Social Games BusinessTags confirmation bias, pre-mortem2 Comments on Confirmation of Confimation Bias

Thinking, Fast and Slow, Part 4: The Yom Kippur War

When reading Michael Lewis great book about Daniel Kahneman and Alex Tversky, The Undoing Project, Lewis references several times the Yom Kippur War. The war had a big influence on the thinking of Kahneman and Tversky.

The references particularly piqued my interest because I was too young to understand what was happening during the conflict but it did not make its way into most history texts when I was in school. It was also interesting because in a matter of days it went from a war that looked like it could destroy Israel, there were rumors they were even considering the nuclear option, to a war where the entire Egyptian Third Army was encircled.

With changes on the battlefield that dramatic there had to be fantastic lessons in decision making so I decided to learn more about the conflict. By reading The The Yom Kippur War: The Epic Encounter That Transformed the Middle East by Abraham Rabinovich, I learned how the Yom Kippur War is a great case study in the biases and paradigms that form the foundation of Kahneman’s Thinking, Fast and Slow.

yom kippur war

The danger of overconfidence

The Yom Kippur War highlighted one of the biggest errors in decision-making, over-confidence. If Israel had not mobilized its reserves shortly before the war started, the odds at the beginning of war would be in the Arabs’ favor by several orders of magnitude. The 100,000 Egyptian soldiers and 1,350 tanks west of the Suez canal faced 450 Israeli soldiers in makeshift forts and 91 Israeli tanks in the canal zone. On the northern front, where Israel faced Syria, the Syrians enjoyed 8 to 1 superiority in tanks and far greater in infantry and artillery.

The limited forces Israel deployed on both the Syrian and Egyptian fronts opposite vastly larger enemy armies reflected a self-assurance induced by the country’s stunning victory in the Six Day War. Israel believed it had attained a military superiority that no Arab nation or combination of nations could challenge.

Even when war appeared likely, the Israelis moved only a small number of forces to face the Syrians. Abramovich quoted the Israeli Chief of Staff, Dado Elazar as saying “’We’ll have one hundred tanks against their eight hundred, that ought to be enough.’ In that sentence, Elazar summed up official Israel’s attitude towards the Arab military threat.“

This overconfidence almost led to the collapse of the Israeli military. Abramovich wrote, “a common factor behind all these failings was the contempt for Arab arms born of that earlier war, a contempt that spawned indolent thinking.“

The reality was that the Egyptian and Syrian forces were not like their predecessors in earlier conflicts, but instead had the most modern Soviet weapons and a more disciplined and professional military. The overconfidence that prompted the Israeli military to not take seriously its opponents put its soldiers in an untenable position that led them initially to be overwhelmed.

Impact on your life

Given that you probably do not lead an organization with tanks and artillery, you may ask why should I care whether the Israeli military was overconfident. The lesson, however, that is pertinent is that underestimating your competition could be disastrous. Just because your competitor has not been able to develop a product in the past that is of comparable quality to your product, does not mean that they will never have that capability. You may dominate the market but your competition is working on ways to jump over you.

You also may underestimate their likelihood to want to compete in certain market sectors. You may have gained 80 percent of the racing game market after pushing your top competitors away so you move your development to sports games because you now own racing games. Do not assume they do not have a secret project to create a new racing game that will suddenly make your product obsolete.

Confirmation bias

The Yom Kippur War highlighted one of the biases that Kahneman and Tversky have regularly wrote about, confirmation bias. Confirmation bias is when you ignore information that conflicts with what you believe and only select the information that confirms your beliefs.

In the Yom Kippur War, Egypt and Syria were able to almost overwhelm the Israelis because the Israelis did not expect to be attacked by overwhelming force. Although the Arab states did launch a surprise attack, it should not have been a surprise. Both Egypt and Syria mobilized huge numbers of forces (which was visible to the Israelis), while multiple intelligence sources and even the leader of Jordan warned the Israelis an attack was imminent. It was confirmation bias, however, that kept the Israelis from believing they would be attacked and preparing for it (until the last minute).

First, the Israelis ignored any information that did not support their theory that they would not be attacked. Abramovich writes, “Eleven warnings of war were received by Israel during September from well-placed sources. But [Head of Military Intelligence] Zeira continued to insist that war was not an Arab option. Not even [Jordan’s King] Hussein’s desperate warning succeeded in stirring doubts.”

Explaining away every piece of information that conflicted with their thesis, they embraced any wisp that seemed to confirm it.  The Egyptians claimed they were just conducting exercises while the Syrian maneuvers were discounted as defensive measures. Fed by this double illusion—an Egyptian exercise in the south and Syrian nervousness in the north—Israel looked on unperturbed as its two enemies prepared their armies for war in full view. Abramovich writes, “the deception succeeded beyond even Egypt’s expectations because it triggered within Israel’s intelligence arm and senior command a monumental capacity for self-deception. ‘We simply didn’t feel them capable [of war].’”

As I mentioned above, examples of decision making flaws were abundant on both sides and Egypt also suffered greatly because of confirmation bias. When Israel began its counter-attack that eventually led to the encirclement of the 3rd Army, the Egyptians President Sadat only looked at data that supported his hypothesis. Given the blow the Israelis had received at the start of the war and the fact that they were heavily engaged on the Syrian front, the Egyptians were thinking in terms of a raid, not a major canal crossing.  An early acknowledgement of the Israeli activity could have stemmed the attack and possibly left the Egyptians in the superior position but they only saw what they wanted to see.

Impact on your life

I come across confirmation bias almost weekly in the business world. One example you often see in the game space is when a product team is looking to explain either a boost in performance or a setback. If the numbers look good, they will often focus on internal factors, such as a new feature, and “confirm” that this development has driven KPIs. If metrics deteriorate, they will often focus on external factors, maybe more Brazilian players, that confirm the problem is outside of their control. These examples of confirmation bias often lead to long delays identifying and dealing with problems or shifting too many resources to reinforce features that do not have an impact.

Not acknowledging or seeking reality

Another major decision making flaw that the Yom Kippur War highlights is avoiding reality. One of the leading Israeli commanders did not venture out of his bunker and relied on his own pre-conceptions of what was going on rather than the actual situation. Rabinovich writes that “although he was only a short helicopter trip from the front, [General] Gonen remained in his command bunker at Umm Hashiba, oblivious to the true situation in the field and the perceptions of his field commanders. As an Israeli analyst would put it, Gonen was commanding from a bunker, rather than from the saddle.”

On the Egyptian side, to avoid panic, the Egyptian command had refrained from issuing an alert about the Israeli incursion. Thus, the Israeli forces were able to pounce on unsuspecting convoys and bases. There had been a number of clashes involving Israeli tanks and the paratroopers but no one in Cairo—or Second Army headquarters—was fitting the pieces together.

Thus, rather than successfully defending against the Israelis, the Egyptians left their troops blind to what was happening.

Impact on your life

If your game or product is not performing, you need to understand what is really happening. I have often seen products soft launched in tier three markets that show poor KPIs. Rather than reporting these KPIs to leadership, they will proceed with the real launch in tier one markets. This pre-empts the product team from fixing the product and also wastes money with a failed launch.

Assuming the past is the same as the present

Another decision-making bias demonstrated in the Yom Kippur war was assuming the past would repeat. As I wrote earlier, the Israelis would assume the Arabs would fight poorly because they did in previous wars, including the Six-Day War in 1967, where Israel routed the Arab States. They thus did not prepare their forces for any different type of opponent or different weaponry.

This bias also contributed to their failure to realize they would be attacked imminently. When General Shalev, assistant to Israel’s Commander in Chief, was warned of a likely attack, he reminded the so-called alarmist that he had said the same thing during a previous alert in the spring, “you’re wrong this time too,” he said.  Because a previous alert was wrong, the Israeli high command discounted a clear danger.

Impact on your life

In the game space, you frequently see decisions made based on looking in the rear view mirror. I have seen many executives decide to make a type of game – first person shooter, invest express sim, tower defense, etc – because these are the hot type of games. Then when their game comes to market and fails, they do not understand why they always seem to be behind the trends.

Key takeaways

  • The Yom Kippur War provides examples of key errors in decision-making, by both sides, that can be leverages in business.
  • One of the key learnings is that over-confidence can be fatal. Underestimating your competition because you have dominated them can allow them to gain a superior position.
  • Another key error in decision making is confirmation bias, picking out the information that confirms what you want to believe and disregarding the data that conflicts with your hypothesis.

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Author Lloyd MelnickPosted on June 14, 2017June 6, 2017Categories General Social Games Business, General Tech Business, thinking fast and slowTags confirmation bias, over-confidence, thinking fast and slow, Yom Kippur WarLeave a comment on Thinking, Fast and Slow, Part 4: The Yom Kippur War

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Lloyd Melnick

This is Lloyd Melnick’s personal blog.  All views and opinions expressed on this website are mine alone and do not represent those of people, institutions or organizations that I may or may not be associated with in professional or personal capacity.

I am a serial builder of businesses (senior leadership on three exits worth over $700 million), successful in big (Disney, Stars Group/PokerStars, Zynga) and small companies (Merscom, Spooky Cool Labs) with over 20 years experience in the gaming and casino space.  Currently, I am on the Board of Directors of Murka and GM of VGW’s Chumba Casino

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