Lesson 2 of 7 · 12 min
Belief perseverance I: conservatism and confirmation
Conservatism makes people update too slowly when new information arrives, and confirmation makes them go looking for information that supports what they already believe; both protect an existing view at the expense of an accurate one.
In short
- Conservatism bias: sticking with a prior view or forecast by giving too little weight to new, conflicting information. In Bayesian terms, the prior is overweighted and the new evidence underweighted, so beliefs underreact.
- Conservatism is worst with complex, technical or statistical information, because processing it takes more mental effort.
- Fix conservatism by weighing new information properly: ask 'how does this change my forecast?', update in the spirit of Bayes' rule, and get help interpreting hard data.
- Confirmation bias: noticing and seeking what confirms a belief while ignoring or discounting what contradicts it.
- Confirmation leads to one-sided research, biased screens, under-diversification and oversized holdings of the employer's stock.
- Fix confirmation by actively seeking contrary evidence and corroborating a decision with research from a different angle.
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