Cheat Sheet: 10 Easy Questions to Ask Yourself So You Don’t Fall for Cognitive Bias

Here are some common cognitive biases and a question for each that can help someone identify if they are falling into the bias:

  1. Confirmation Bias: the tendency to search for, interpret, and remember information in a way that confirms one’s preexisting beliefs.
  • “Am I only looking for information that confirms what I already believe and ignoring information that contradicts it?”
  1. Availability Heuristic: the tendency to overestimate the importance or likelihood of information that is easily available.
  • “Am I relying too much on information that is easily accessible to me, and not considering other relevant information that may be harder to find?”
  1. Anchoring Bias: the tendency to rely too heavily on the first piece of information encountered when making decisions.
  • “Am I overly influenced by the first piece of information I received, and not considering other options or perspectives?”
  1. Hindsight Bias: the tendency to believe, after an event has occurred, that one would have predicted or expected the outcome.
  • “Am I thinking that I knew all along what would happen when in reality, I only know this after the fact?”
  1. Framing Effect: the influence of wording, context, or presentation of information on decision making.
  • “Am I making a decision based on how the information is presented to me, rather than the actual information itself?”
  1. Overconfidence Bias: the tendency to overestimate one’s abilities or the accuracy of one’s beliefs.
  • “Am I overestimating my abilities or the accuracy of my beliefs without considering other possibilities?”
  1. Self-Serving Bias: the tendency to attribute successes to personal abilities and failures to external factors.
  • “Am I attributing my successes solely to my abilities and blaming external factors for my failures?”
  1. Bandwagon Effect: the tendency to do or believe something because many other people do or believe the same thing.
  • “Am I making a decision solely based on the fact that many other people are doing or believing the same thing, without considering other options?”
  1. Negativity Bias: the tendency to give more weight to negative experiences or information than positive ones.
  • “Am I focusing too much on negative experiences or information and not giving enough attention to positive ones?”
  1. Sunk Cost Fallacy: the tendency to continue investing in a decision or course of action because of past investment, even if it’s no longer rational.
  • “Am I continuing with a decision or course of action solely because I have already invested so much into it, rather than considering if it’s still rational to do so?”

Banking on Tech

Write a short article comparing the business model of a bank to the business model of a search engine framing the depositors as users and loan customers as advertisers. Make a case that it would be possible to segment bank customers into free and paid tiers based on their profitability.

The business models of a bank and a search engine may seem unrelated at first glance, but there are similarities that can be drawn between them. In this article, we will explore how the depositors of a bank can be compared to the users of a search engine, while the loan customers can be likened to advertisers.

Both banks and search engines rely heavily on the trust and loyalty of their users. Banks attract depositors by offering a range of services, such as savings accounts, checking accounts, and loans. Search engines attract users by offering relevant search results and a personalized experience. In both cases, these businesses make money by leveraging the data and preferences of their users.

In the case of banks, loan customers can be compared to advertisers. Just as advertisers pay search engines for targeted ads, loan customers pay banks interest on their loans. Banks use the funds from these loans to pay interest on deposits and to fund their operations. This creates a symbiotic relationship between depositors and loan customers, where both parties benefit from each other’s participation in the system.

It’s possible to segment bank customers into free and paid tiers based on their profitability. Free users are depositors who don’t take out loans or use other fee-based services, such as overdraft protection or wire transfers. These users generate revenue for the bank by allowing the bank to lend their funds to other customers. In contrast, paid users are those who use fee-based services, such as loans, credit cards, and other lending products. These users generate more revenue for the bank because they pay interest on their loans and may also incur fees for certain services.

In conclusion, while banks and search engines may seem like vastly different businesses, they share many similarities. Both rely heavily on the trust and loyalty of their users, and both generate revenue by leveraging the data and preferences of those users. By segmenting bank customers into free and paid tiers based on their profitability, banks can ensure that they are maximizing their revenue while still providing value to their customers.