“Contrary to the rules of philosophers of science, who advise testing hypotheses by trying to refute them, people seek data that are likely to be compatible with the beliefs they currently hold. The confirmatory bias [of our minds] favors uncritical acceptance of suggestions and exaggerations of the likelihood of extreme and improbable events . . . [our minds are] not prone to doubt. It suppresses ambiguity and spontaneously constructs stories that are as coherent as possible.”
“...evidence is that we are born prepared to make intentional attributions.”
- Thinking Fast and Slow Daniel Kahneman
Most investors just look for data that confirm our current opinions. If we think the Fed will increase rates x times in 2020, we look for data that confirm our view of the world. If we believe that an oil price shock will generate a recession, we look for data to confirm that narrative. It is in our nature. The argument may be true, but that does not mean we should immediately accept it.
The only way to move away from this confirmatory bias is to look for contradictory information to our current beliefs. If we cannot find any contradictory information, we are not looking hard enough. There is always another narrative to fit a set of facts. If you cannot find it, find a person that has an alternative view and ask for their logic. Don't ask someone to play the role of the devil's advocate. That does not work. Truly look for alternative views or data. Just beware of the confirmatory bias.
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