Cognitive bias

Cognitive bias

Cognitive bias 1200 800

At Wi-Ai we’re in the “better decisions business”. Specifically we’re in the “helping financial services businesses build more profitable and harmonious relationships with customers by supporting said customers to make better financial decisions” business. We do that by supplying software that helps your customers identify and take agency for their behavioural biases.

Taking a step back for a moment: how do we do that?

Well, behavioural biases are a form of cognitive bias.

Just how does cognitive bias affect decision-making?

Firstly, let’s look at what cognitive bias is.

Cognitive bias is essentially a flaw in our reasoning that can lead us to misinterpret information from the world around us, which in turn can influence us to make incorrect decisions.

Every day our brains are flooded with information from millions of sources. Over time, our brains develop a kind of ranking system to decide which information deserves our attention and which information is important enough to store in our memory. It then creates “shortcuts” which help reduce the time it takes for us to process information. The trouble with this is that the shortcuts and ranking system aren’t always objective, because they have been shaped by our own life experiences. Crucially, we are generally unaware of how these have shaped our “gut reactions” to situations, so our biases generally remain sub-conscious.

If you apply this to a situation where, for example, an individual is looking for professional financial advice, the conclusions and decisions they make may be distorted by their past experiences or how they see certain situations. However, one person’s experience of something might be completely different to someone else’s, so basing decisions on just your own experience isn’t always prudent.

Using our behaviour finance software, a user can obtain a report describing their susceptibility to a range of behavioural biases that influence decision-making for all of us. This is achieved by the user answering a number of accessible and enjoyable questions about their responses to everyday situations. The software then calculates their Profile via our algorithms, displaying a short Profile onscreen and a longer downloadable pdf Report with more information about the individual’s behavioural biases and recommendations for re-considering these.

The modules address a range of common biases.

For financial services providers, networks and large advisory businesses, putting these tools in your customers’ hands creates a new level of engagement and ability to have dispassionate conversations about sensitive subjects, such as dips in  portfolio values. The enhanced level of guidance and service you offer your clients or customers may, in turn, benefit both the harmony and duration of your relationships with customers and your business’s resultant success and profitability.

To find out more, get in touch at [email protected]

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