Behavioural science

tuned into the investment decision

Within any decision lies our human behavioural psychology 

Innovations in behavioural science and cognitive psychology,
are gaining acceptance amongst investors.
 
Behavioural science is used to explore entrepreneurial and leadership styles, and cognitive biases.

Cognitive bias is a natural human ‘shortcut’ way of  thinking.

By pattern recognition, it saves time in our decision making. It’s useful.

 

The aim is to bring that pattern recognition up to our conscious level, so we can run the thought past our intentional logic. 

experience, intuition, what worked before,
the next Mark Zuckerberg 

Stability bias

resistence to change

Cognitive bias has many forms

Availability heuristic

drawing on immediately available information only

Anecdotal fallacy

relying on a sample size of 1 or 2, and applying the results to everyone

Affiliation bias

familiarity

Anchoring bias

resistence to new information

Implicit egotism

gravitate to people who resemble us

Gender stereotype notions

expecting or assuming notions of behaviour based on gender 

Group think

gravitation towards harmony or conformity in the group

Endowment bias

valuing higher the investments we own

other bias rationalise perceptions as 'reality'

Counter with

diversity of thought

NO blame here, we're all biased, me too. 

Find your incentive.

Bias, its how our mind naturally

filters information

We all think we are objective, yet statistically, we are all wrong. 

The influence of unconscious 'bias' feels so strongly intuitively right,

that naturally we believe we are objective. 

 

Our unconscious 'bias' is vital to get through our everyday lives, 

to filter the vast amount of information we receive every minute of every day.

 

It's a vital part of our survival. When there's danger, we can't wait to assess all the information available, we need to react immediately. It's a process we do without even thinking about it. Before we cross a road we filter information to quickly assess whether its safe.

That same, quick filter and extrapolation process, 

is vital when crossing the road,

though not helpful

when it can have unintentional unprofitable outcomes. 

“Flip it to test it"

If you think something you are saying or doing may be subject to your unconscious bias rather than your conscious values, flip it and see if you feel the same way.

Kristen Pressner, Global Head Human Resources, Roche Diagnostics

Gender stereotype notions

expecting or assuming notions of behaviour based on gender 

One step, is to notice things 

we may not realise we are doing

To notice where our subtle language, and tone,

reflect unconscious stereotypes that

do not match with our conscious values.

To notice how, these stereotypes play out in our everyday decisions, how they can put limits on our perception of others,

or put limits on ourselves.

Notice the terms we use 

Women who pitch tend to be called 'she' or occasionally 'business owner'.

Men were called 'entrepreneur,

innovator, business owner, inventor'.*

'entrepreneur, innovator, inventor, founder,

business owner

 The solution

Notice how subtle language can influence your perception of another's competence.

Use the same term for all founders and give yourself the same baseline perception for everyone who pitches.

In a University of Santa Barbara study, business plans were switched male or female names.

Under the female name the same plan was rated less competent and received less (hypothetical) investment

When the business plan was

highly innovative, this

bucked gender stereotypes

of women being less bold and risk loving.

The solution ... investors and founders can both 'lean in'.

 'Our image of an entrepreneur desperately needs an update - here's how we change it'
by Harley Finkelstein

 '50 Ways to Fight Bias gives people the tools to address gender bias head-on ... 50 Ways cards & videos are designed to help men play a meaningful role in identifying and combating bias.' by LeanIn

Our unconscious shortcut thinking can limit what we see,
and unwittingly lead to dismissal of the more profitable investments.
 
By rewired thinking, 
we see more investment opportunities.

BE IN TOUCH

  • LinkedIn - White Circle
© 2019  Amy Newton