According to my speculation, most of us feel a sense of destiny when we decide to buy something, especially when it’s big-ticket items such as houses and cars. We may happen to see some articles saying “Now is the best time to buy!” Or we may remember our horoscopes we saw in some magazine. No offense, but there’s no such destiny in our buying behavior. It’s confirmation bias. Me? Of course, always biased, the same as before. I have been trading stocks for years. In most cases when I place orders, I feel like I found secret signs that only a genius can see. Guess what happened next? I stopped facing the reality (the balance of my brokerage account). Be wary of confirmation bias.
Destiny doesn’t guide us to significant information. We always seek information supporting our decision. As Caesar said, men willingly believe what they wish to believe. This human psychology is the source of the bias. Making matters worse, there’s another human nature enhancing the bias, which is our pride. It isn’t a pleasant experience for anyone to admit a mistake. In order to justify our decision, we always try to collect and cling to supportive information. Fraud is a good example. We can’t get out even though being vaguely aware that it may be a fraud, unless we admit our mistake.
Last time, I wrote about how difficult it is to attract attention in the market. This bias can be said to be one of the factors for that. In most markets, brand hierarchies have been already established, and confirmation bias obstructs people from turning their attention to outside the top brands. I didn’t mean there was no chance for new brands, like us in the world furniture market. Confirmation bias is like a flywheel. It’s difficult to make it move, but once starting to move, it helps us gain momentum. People’s shells are reinforced every day, get more difficult to break, but I’m always writing desperately telling myself that a little leak will sink a great ship.
He is travelling around the world. His passion is to explain Japan to the world, from the unique viewpoint accumulated through his career: overseas posting, MBA holder, former official of the Ministry of Finance.