To successfully navigate the tough decisions we face in a crisis, business owners must ensure that the information we incorporate is accurate, unbiased and relevant. To accomplish that we must dispel our subconscious “information illusions” that distort the information we consume and how we process it.

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In this article we will explore three of the most influential information illusions:

1) The ideas and beliefs we currently hold are correct
2) An expert in one domain is a reliable authority in other domains
3) Information that is top of mind is most important

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Decisions in a crisis
As a professional speaker my business consists solely of providing valuable insight at live events on topics relevant to my clients’ audiences. Or I should say, that was my business. The coronavirus pandemic brought my business to a screeching halt.

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Your business may not have been strangled as thoroughly as mine was, but chances are yours has also been disrupted to at least some degree, as have many of your customers.

When a crisis or other major disruption suddenly smacks your company, industry, or market, you are faced with some high-impact decisions, such as:
     - How much debt can and should you take on?
     - Should you lay off or furlough employees and staff?
     - Should you explore additional sources of revenue
     - Do you need to pivot your entire business?
     - What breaks or incentives, if any, should you give your customers?

     

And finally - the big question: Is now the time to just pack it in?

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Decisions and information illusions
A crisis can wreak havoc on our ability to process information clearly and effectively. The stress and heightened emotions that a crisis brings magnifies our cognitive biases. We need to understand these “information illusions” in order to mitigate their influence on our decision performance.

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Information illusions stem from the tricks our brains use to help us survive. These subconscious mental shortcuts, emotional impulses, and cognitive biases evolved millions of years ago to keep our ancient ancestors alive in the harsh wilds, They helped them to act and make decisions quickly so they could avoid danger and stay safe. 
For the modern human, however, these impulses that prefer fast and easy decisions do not usually produce the best outcomes.

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The following illusions allow us to form beliefs about information quickly and make decisions faster, but can be harmful when our goal is to make sound decisions that best achieve our business goals.

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Confirm our held beliefs and opinions
Known as the “mother of all biases,” confirmation bias occurs when we consume, prioritize or give credence to information that supports our current beliefs and we ignore information that contradicts them. It is an illusion because it creates a false perception of the value of an idea or piece of information.

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For example, a business owner feels that because of the pandemic they need to cut expenses by laying off staff. You meet with your executive team to discuss options. When someone presents information that supports your view, you place a high value on it and deem the information to be highly credible. When opposing viewpoints are presented, however, you look for holes in the logic or reasons why those options are not as good as your preference.

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Additionally, your team members are more likely to go along with your idea in order to gain your favor rather than be an irritant by opposing it.

 

Halos and horns
The halo effect occurs when a person is an authority in one area and we believe their views, opinions or advice in other areas. For example, a respected Infectious disease expert makes an economic forecast for the coming months. You may assume they are credible because of their credentials even though they have no background in economics.

 

Like confirmation bias, this illusion can cause us to irrationally overvalue some information while disregarding others.

Conversely, we fall for the opposite effect as well. You may instinctively disregard the opinion of someone because of a single negative trait or experience. This is called the horn effect or devil effect (picturing a person with devil’s horns).

 

To mitigate the halo and horn effects, ask yourself these questions before making a judgment about a person’s views or opinions.

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     - Do you have a strong like or dislike for the person or organization providing the information?
     - If so, is your like or dislike relevant to the issue at hand?
     - Is the source a reliable expert in the area they are addressing?

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If you find your opinion on the information may be biased by the halo or horn effect, look to different sources from experts with proven credibility in those fields.

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Preference for the most recent, frequent, and easily recalled
Several cognitive illusions relate to how we value information that easily comes to mind over information that is more difficult to access.

 

Availability Heuristic
This mental shortcut occurs when evaluating a topic, concept, or decision. It produces the feeling that if something can be recalled easily (more readily available mentally) it is more important than something less easily recalled. The next two illusions contribute to making information easy-to-recall.
 

Recency effect
The more recent a thought or idea, the easier it is to remember. If several ideas are presented, we can recall the last (most recent) one easier than the others. This makes it seem more important because of the availability heuristic.
 

Mere-exposure effect
Things that are familiar to us get preference over things that are not. If two ideas are presented to you - one you have heard of and one that is new - you are more likely to prefer the one you have been exposed to before.

 

To outsmart these three illusions, adopt a mindset that places a high value on ideas or concepts that are new to you. Avoid the urge to go with what instinctively “seems” best. Create a structured decision making process that  evaluates all options equally, regardless of how familiar you are with the concept.

 

Metacognition
Overcoming our own illusions and cognitive biases takes a little extra effort because we have to practice metacognition - thinking about our thinking. But the payoff of better decision performance is huge, especially during times of crisis.