Exploratory and confirmatory thinking - Too much of the latter and not enough of the former

Reasoning can be broken into two major types, exploratory thinking, the evenhanded consideration of alternative points of view, and confirmatory thinking, the attempt to rationalize a particular point of view. We spend a lot of time on confirmatory thinking because it justifies our point of view. We prove we are correct through our confirmatory thinking. Exploratory thinking is hard because it requires us to think beyond our current point of view. Exploratory thinking may have to accept that our conventional thinking is wrong. 

This thinking is different from exploratory and confirmatory statistical analysis. Confirmatory analysis focuses on hypothesis testing, determining whether a statement is true or false. Exploratory analysis looks for new data links that will lead to potential hypotheses. It is just trying to determine what data have to say.

The exploratory and confirmatory thinking dichotomy was developed by Jennifer Lerner and Philip Tetlock in Emerging Perspectives on Judgement and Decision Research. This dichotomy describes one of the key problems with any investment analysis. Most analysts will provide you with strong confirmatory thinking about their positions. Little work will focus on alternative inconsistent with positions taken.

Tetlock states, "A central function of thought is making sure that one acts in ways that can be persuasively justified or excused to others. Indeed, the process of considering the justifiability of one's choices may be so prevalent that decision makers not only search for convincing reasons to make a choice when they must explain that choice to others, they search for reasons to convince themselves that they have made the "right" choice."

With confirmatory thinking, there is the desire to focus on my-side explanations. We want to be right and not have to admit any mistakes so we look for data and stories that accept our specific view of the world. Exploratory thinking focuses on why, but without any preconceived notions of what should be the answer.     
Always ask the simple question. Are your arguments for an investment position just confirming your conclusion or are you also looking for alternative explanations? 

See:

Smart investors not immune from my-side argument bias

Active open-mindedness - Eliminating some behavioral biases