Cognitive bias and personality types

Cognitive bias and personality types

Knowledge of cognitive bias and personality types should determine who you ask for advice.  For instance, a friend of mine differs from me in personality.  While I prefer solitude, silence, skepticism and endurance sports (as a participant, not an observer), he prefers noise, people, faith (in people) and team sports (as a fan).  For those familiar with the concept, we lie on different ends of the Autistic spectrum (me near Aspberger’s Syndrome, him neurotypical).  I recently spoke to him about a new investment strategy he was considering.  I was not surprised to realize that we suffer from different cognitive biases due to our different personality types.

 © by Casey Serin

We talked about the new strategy for quite a while, and I did not understand how it could work in real life.  To judge from the marketing material the seller sent over, it seemed like a prime example of survivorship bias.   I told my friend this, and he said he was not concerned as he trusted the person selling it to him.

Having to trust the person selling the investment product to you irritated me.   Why should that matter? I’ve found investment decisions to be an easy process in concept.

  • Step 1 – Find something you understand, that has an acceptable level of risk and maintenance.
  • Step 2 – Buy it from someone who will deliver as promised, i.e. 100 shares of VTIVX for example.
  • Step 3 – Profit!
To me, the hard part has always been understanding the investment.   Buying from someone has always been easy.
My friend sees the investing process in the following way:
  • Step 1 – Find someone you trust and seems knowledgeable about investment
  • Step 2 – Buy from that person
  • Step 3 – Profit!
To be fair, my friend gets along with people far better than I do.  I defer to his judgement on matters involving people.  For fans of Jonathan Haidt and the Heath Brothers, we would make a good team of the elephant and the rider).   His talents lie in reading people, my talents lie in reading systems.
I think I am in the right on this particular investing decision, we will know in 20 years which one of us made the right call.  The conversation made me wonder what other subjects we might differ on, and who would have the better judgement.  Here is a preliminary list:
Advantage Me:
  1. Investing
  2. Design
  3. Programming
  4. Mechanical objects
  5. Physical Organization
Advantage My Friend:
  1. Interviewing
  2. Public speaking
  3. Performances
  4. Management of people
  5. Conflict Resolution
I guess the moral of this little diatribe has been to consider where you get your advice.  For non-people related matters, talk to someone like me, for the human element, talk to someone like my friend.

Editor’s Note

This blog post originally appeared on the Profit Awareness Blog – as that app is up for sale, it has been consolidated into the main Digital Tool Factory blog.

 

Written By Steve French

 

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