Cognitive Biases – How They Can Affect Business Decisions

Cognitive biases are a hot topic these days.

And while they’re not all applicable to every business, we want to highlight a few common mental errors that could affect your own marketing and business decisions – and how to recognize them.

Here are the biggest ones:

Dunning-Kruger effect

This is the phenomenon where you think you know more than you do.

And, ironically, it’s because you actually know very little.

In marketing, this often happens when we assume we know a lot about specialized topics, like SEO or copywriting.

The solution? When you can, let specialists dominate their own area. Don’t micro-manage.

Fundamental Attribution Error

When other people make mistakes, we often attribute their mistakes to their character.

When we make mistakes, we attribute our mistakes to our situation. In marketing or business, this is a dangerous road – you can make excuses for yourself while thinking poorly of others.

The solution? Every time somebody makes a mistake, try to put it in context the same way you’d do for yourself.

Anchoring Bias

Most people place lots of weight on the first piece of information they learn about a topic, whether that is credible information or not.

Imagine that a friend teaches you how to set up TikTok Ads: Even if your friend is bad at running ads, you’ll give their initial advice more weight than advice you hear down the road.

The solution? Acknowledge that you’re likely putting more stock in certain pieces of advice than others, and that your reasons for doing so may be bad. Use this to analyze your decision-making going forward.

Final word

We’ve written this to help you understand a few of your own biases.

But, it’s also helpful to understand that your customers will have these biases, too.

Think about how you might be able to use these to your advantage as you market your products.