Cognitive Bias Essay Example | Topics and Well Written Essays - 4500 words

Cognitive Bias - Essay Example Daniel Kahneman asserts that cognitive bias in decision making process is the intuitive preferences that unswervingly violates the rules related to the rational decision (48). Therefore, a cognitive bias takes place when a psychological pattern changes a decision maker’s subjective view of a problem to differ from the reality. So as to understand how this works, John Butler elucidates how the mental life of a decision maker can be described as two agents (39). The agents include system one and system two. In system one, automatic operations take place that is working quickly by applying a little effort and is not enthusiastic to take control of the thoughts. However, system two is able to construct the necessary thoughts and take the necessary thoughts, for instance doing complex computations and reasoning. Notably, more effortful mental activity occurs in system two. The activities in system two are connected to the subjective experience of choice, connections and agency (Ser fas 71). Anchoring refers to the biased judgment of a stimuli that is based on an incentive assessment of another stimulus and an inadequate alteration away from the initial assessment (Kahneman 52). In other words, this means that a previous presented value affects decision makers when they are about to estimate an unidentified quantity, which is closer to the value considered before the estimate. A good example of the anchoring effect in decision-making is how a decision-maker is influenced by price when buying goods from different suppliers. A higher price will influence the decision maker to value the goods higher than what he/she would have done if the price of the goods is lower. Daniel Kahneman claims that any number a decision maker is asked to consider as a possible solution to an estimation problem will predominantly induce an anchoring effect (50). Any numerical judgment that is under