What’s the Most Confusing Behavioral Bias?

What’s the Most Confusing Behavioral Bias?

We are all awash in information. Some of this information conflicts with our preconceived notions but most supports these beliefs. Guess what? We neatly filter out most of what doesn’t conform to our favorite narrative. This is dangerous and it’s pervasive. This is Confirmation Bias.

Confirmation Bias affects how you think and act. No matter how errant your beliefs may be, there is always a cable channel or someone on Twitter that agrees with you. This hardens your beliefs and makes them incredibly difficult to change.

Confirmation Bias has a direct impact on your financial decisions, of course, but also impacts other areas of your life. For example, if you follow a mostly carnivore diet, you likely hold in disdain those who choose the vegan diet approach. It’s easy to find countless books, scientific articles, and directives for both. What you believe depends largely (say 95%) on where you look; where you get your information.

Anything to do with politics of course is super charged for Confirmation Bias. You find it almost beyond belief that your best friend plans to vote for a particular political candidate and you plan to vote for another. Each of you is filtering anything that you see, hear, or read to confirm your own beliefs.


The first step to overcoming the destructive impact of Confirmation Bias on your financial choices is to refer back to your Why as a guide. What are you trying to accomplish; Who are you trying to protect?

Why Chart

Behavioral biases create blindspots that impact how you perceive risk and uncertainty. Going back to your Why can illuminate your values which can override the sometimes erroneous information you ingest.


Many of you have seen some version of the “Heads Up, Phones Down” signs along busy intersections, particularly on college campuses where students are easily distracted by their phones.

The underlying principle of this intervention has application for financial decisions as well. You should take time to look around and not just at the pre-selected stuff that appears on your phone.

One of the primary reasons Confirmation Bias is confusing can be traced directly to our innate craving for certainty. The financial “news” networks prey on this and gladly serve up what we desire, even if it isn’t reality. In our firm, we relentlessly counter this myth by stressing to clients that financial planning is inherently imprecise because the future is always uncertain. That’s reality.


Uncertainty, however, doesn’t have to be frightening. There are plenty of things in our lives that are uncertain and we like them that way. We read books and watch movies that are suspenseful. We go snow/water skiing or windsurfing where the experience depends largely on the uncertainty of the waves or the snow. Uncertainty provides something we like, the element of surprise.

Confirmation Bias is nearly impossible to detect because it feels so natural. Of course the stock market will collapse because everything you read, watch, or hear says so! Interest rates are bound to go through the roof because…We don’t even recognize this because we mostly live inside our own little Confirmation Bias bubble.


Financial planning is successful if it provides just two things: more time to live life; and, less time worrying about money. Confirmation Bias erects a huge obstacle to these desired outcomes. Ultimately you have to decide if you want to reside in the real world, full of uncertainty (and surprise), or the insular world where every minute of every day is a fire drill. Start there. Ready for a real conversation?