Imagine all the monkeys in Bangladesh in front of Dhaka and Chittagong Stock Exchanges. They have a digital device with which they can buy and sell stocks. They start pressing their touch screens and trade stocks at random. They don't know what they're doing, but carry on doing this for one week. If statistics provides a benchmark, after one week, half of the monkeys should have made a profit, the remaining half, a loss. Let's send the monkeys who made a loss back home. After the second week, one half makes profits and the other half makes losses. Again we send back the monkeys who made losses. This continues till only one monkey remains in front of each stock exchange. People take photos and share them on Facebook. Instantly, the media pounces. These monkeys must be clever, says the media. Entire Bangladesh thinks so. Stop and think. If you've also reached this conclusion, you've fallen for the outcome bias. The media and Bangladesh saw the end result. They didn't see the process that lead to that end result.
We tend to link the end outcome of a series of events to a decision that was made in the past. Judging a decision purely by its result can be misleading when random or external effects influence the outcome. Pressing buttons at random did make the last two monkeys successful, but that does not necessarily imply the two monkeys were clever. From the opposite spectrum, your answer to a math problem in an exam may be wrong. This does not necessarily imply your steps were wrong too. The monkey example raises a serious question: do we easily get influenced by success or by something that looks appealing? Should we judge a book by its cover?
In 1920, Edward Thorndike coined the Halo Effect. We tend to fall for 'the first impression is the last impression'. If the first impression attracts us, it may well be the last impression we form. Beauty, gender, social status, age, power, money etc can easily influence our first impression. Consider beauty. Numerous studies show we tend to find good looking people (men and women) more pleasant, honest and intelligent. Good looks and mild manners can win hearts like a nice book cover can influence the buyer. Marketing companies prowl on this Halo Effect. We see celebrities promoting products with which they probably have no connection. Does that matter? We see the surface, the celebrity. The marketing company sells us its product. Even teachers are not immune from the Halo Effect. Studies have shown that teachers can be biased towards nice handwriting and other non-academic attributes in students. The following can easily happen while meeting a stiff deadline. The teacher finds the answer to a problem is wrong. This means the steps (process) in the solution are also wrong. This is misleading logic. Certainly you wouldn't want to be on the receiving end.
We may not always scratch the surface to find the inner beauty or ugliness that didn't reveal at first glance. By moving on instincts, we tend to fall for the Outcome Bias and the Halo Effect. Judging an event by its end result or forming a view about something based on non-relevant factors may generate misleading conclusions. These psychological biases prevent seeing through masks and layers that conceal the story behind a story.
Next time you see a pretty face or a happy ending, dig a little deeper before you find out 'hell [can] freeze over'. Do the same when you don't see a pretty face or a happy ending. When somebody asks why, ask yourself, why not? May be then you can tell the difference between a 'smile from a veil' and 'blue skies from pain'. Being careful is better than not being careful. That's food for thought at the beginning of 2014.
Source: The Art of Thinking Clearly by Rolf Dobelli. Sceptre Books 2013.
Asrar Chowdhury teaches economic theory and game theory in the classroom. Outside he listens to music and BBC Radio; follows Test Cricket; and plays the flute. He can be reached at: email@example.com