What is Critical Thinking?

Critical thinking involves analyzing observations, facts, evidence, and arguments to form a judgment about what someone reads, hears, says, or writes.

Concept OverviewCritical Thinking is a cognitive process characterized by the ability to objectively analyze, evaluate, and synthesize information, ideas, or arguments. It involves actively questioning assumptions, identifying biases, and applying rational and logical reasoning to make informed decisions or judgments. Critical thinking is not limited to academic or intellectual pursuits; it is a valuable skill applicable to various aspects of life, including problem-solving, decision-making, and effective communication. It plays a pivotal role in fostering intellectual independence and developing well-rounded individuals.
Key PrinciplesThe key principles of Critical Thinking include:
1. Questioning: The willingness to question assumptions, beliefs, and information, seeking evidence and logical support.
2. Analysis: The ability to break down complex issues or arguments into their component parts for deeper understanding.
3. Evaluation: The skill to assess the credibility, relevance, and quality of information or arguments.
4. Inference: Drawing logical and well-supported conclusions based on available evidence.
5. Problem-Solving: Applying critical thinking to identify and solve problems systematically.
6. Open-Mindedness: Approaching issues with an open mind, considering diverse perspectives and avoiding biases.
ComponentsCritical Thinking involves several components:
1. Observation: Careful observation of details and patterns.
2. Interpretation: Interpreting information accurately.
3. Analysis: Breaking down complex problems or arguments.
4. Evaluation: Assessing the credibility and validity of sources and claims.
5. Inference: Making logical conclusions based on available evidence.
6. Explanation: Clearly articulating one’s thinking and reasoning.
7. Problem-Solving: Applying critical thinking to find solutions.
8. Decision-Making: Making informed decisions based on analysis and evaluation.
ApplicationsCritical Thinking has wide-ranging applications:
1. Education: Fosters intellectual growth, enabling students to analyze and learn effectively.
2. Professional Life: Enhances problem-solving and decision-making skills in various careers.
3. Communication: Improves the ability to convey ideas clearly and persuasively.
4. Scientific Research: Essential for forming hypotheses, conducting experiments, and interpreting results.
5. Everyday Life: Useful for making informed decisions, such as purchasing choices or evaluating news sources.
6. Leadership: Enables leaders to analyze complex situations and make strategic decisions.
Benefits and ImpactCritical Thinking offers several benefits and has a significant impact:
1. Informed Decision-Making: Helps individuals make well-informed and rational decisions.
2. Problem-Solving: Enhances problem-solving abilities in various contexts.
3. Effective Communication: Improves the clarity and persuasiveness of communication.
4. Bias Reduction: Aids in recognizing and mitigating cognitive biases.
5. Lifelong Learning: Promotes a disposition for lifelong learning and intellectual curiosity.
6. Innovation: Encourages creative and innovative thinking. 7. Empowerment: Empowers individuals to question and challenge the status quo.
8. Ethical Reasoning: Facilitates ethical decision-making and moral reasoning.
ChallengesChallenges in developing and applying Critical Thinking include the need for time and effort, potential resistance to questioning deeply held beliefs, and the prevalence of misinformation in the information age. However, the benefits of critical thinking far outweigh these challenges, making it a valuable skill to cultivate and apply.

Understanding critical thinking

Critical thinking is a practice that has been debated and honed for around 2,500 years, but the term itself was likely first introduced in 1910 by American philosopher, psychologist, and educational reformer John Dewey.

In his book How We Think, Dewey described critical thinking as an “active, persistent, and careful consideration of a belief or supposed form of knowledge in the light of the grounds which support it and the furthest conclusions to which it ends.”

Dewey also wrote his book to help readers take inspiration from the natural curiosity, fertile imagination, and love for experimentation that many children possess.

Richard Paul and Michael Scriven’s definition from the 8th Annual International Conference on Critical Thinking and Education Reform in 1987 is also worth a mention.

Paul and Scriven considered critical thinking to be an intellectually disciplined process where information was actively and skilfully conceptualized, analyzed, applied, synthesized, and evaluated.

This information – gathered from observation, reflection, experience, reasoning, or communication – forms the basis of one’s actions and beliefs.

In its pure form, Paul and Scriven argued that critical thinking was “based on universal intellectual values that transcend subject matter divisions: clarity, accuracy, precision, consistency, relevance, sound evidence, good reasons, depth, breadth, and fairness.”

The qualities of a critical thinker

At the core of every critical thinker is the ability to be an active learner who questions ideas and assumptions rather than simply accepting them at face value.

That is, they are not passive recipients of information and will always strive to ensure that the information present best represents the bigger picture. 

To that end, the critical thinker can:

  • Determine the relative importance of different ideas, arguments, or facts.
  • Identify reasoning errors or inconsistencies.
  • Tackle problems in a systematic fashion.
  • Easily understand the link between ideas. 
  • Build, recognize, or appraise arguments.
  • Critically reflect on their own assumptions, beliefs, and values to learn from past experiences and improve in the future, and
  • Substantiate and communicate their reasoning to others.

Critical thinking skills that are important in business

Here are just five critical thinking skills that are important in business:

Evaluation of alternatives

Successful businesspeople can accurately evaluate a list of options and establish priorities.

They can also determine the quality of each alternative and, as we touched on earlier, explain the rationale behind their decisions.

Decision-making in precise contexts

Critical thinkers use deductive reasoning to anticipate outcomes and predict logical consequences.

They use this skill to consider the implications of directives, policies, and regulations.

Decision-making in ambiguous contexts

Conversely, critical thinkers use inductive reasoning to make decisions in circumstances that are ambiguous, uncertain, or risky.

These decisions are the ones most likely to succeed given the available information.

Problem analysis

Where the individual can identify the key components of a complex problem and then address it with robust analysis and interpretation skills.

Decision-making in quantitative contexts

Data analysis is synonymous with business success.

Strong critical thinkers can interpret and evaluate data across numerous different formats to solve a problem in the most efficient way.

Critical thinking examples

To conclude this piece on critical thinking, we’ll describe a few of the ways it may be useful in business today.

Risk assessment

In finance, wealth management firms must routinely evaluate new legislation to determine whether it will affect their ability to deliver client returns.

This requires careful analysis of the data, problem-solving (determining how the firm can work around the new legislation), and creativity (open-mindedness to the various scenarios or outcomes that could impact operations and client satisfaction). 

In this context, critical thinking is key to turning a profit and avoiding compliance issues.


The objectivity of critical thinking is also crucial during the recruitment process.

Now more than ever, HR departments must be able to analyze hundreds or even thousands of applications to select the best candidate. 

Objectivity means the firm does not favor a certain candidate because of their age, gender, race, connection with another employee, or any other factor.

Critical thinking plays a key role here since confirmation bias is sometimes unconscious and can prevent the organization from recruiting the best talent.

Collaboration and problem-solving

Critical thinking is also important in team-based problem-solving which invariably includes some form of brainstorming or ideation. 

Organizational teams that employ critical thinking first encourage all team members to contribute and then analyze their input in a logical and constructive way.

The most effective teams recognize any weaknesses or negative points in a colleague’s argument and use evidence to support their assertions.

Customer Service Improvement

A customer service team is faced with a high number of customer complaints about a specific product feature.

To address the issue, they use critical thinking to analyze the feedback, identify patterns and root causes of the problem.

By examining the data, they can develop targeted solutions to improve the product and enhance customer satisfaction.

Marketing Campaign Analysis

A marketing team launches a new advertising campaign for a product, but sales don’t meet expectations.

They use critical thinking to review the campaign’s performance, analyzing consumer feedback, market trends, and competitor activities.

By identifying the strengths and weaknesses of the campaign, they can make data-driven adjustments to maximize its effectiveness.

Supply Chain Optimization

In a manufacturing company, the supply chain team uses critical thinking to optimize inventory management.

They analyze historical sales data, production schedules, and lead times to identify areas where inventory levels can be reduced without affecting customer service.

Through careful analysis, they can streamline the supply chain and reduce costs.

Negotiation Strategies

In a business negotiation, critical thinking is vital to analyze the other party’s interests, motivations, and potential leverage points.

By understanding the underlying factors, negotiators can develop effective strategies to achieve mutually beneficial outcomes.

Financial Decision-Making

A CFO uses critical thinking to evaluate potential investments and financial strategies.

They analyze financial statements, market conditions, and economic trends to make informed decisions about capital allocation and financial planning.

Crisis Management

During a crisis or emergency, leaders employ critical thinking to assess the situation, identify immediate risks, and develop response plans.

They must act quickly and decisively based on available information to mitigate the impact of the crisis.

Product Development

In a technology company, product managers use critical thinking to identify market gaps and opportunities for new product development.

They analyze customer feedback, competitor products, and technological advancements to create innovative solutions that meet customer needs.

Business Expansion

A company is considering expanding its operations to a new market.

Critical thinking is essential in conducting market research, assessing regulatory environments, and analyzing potential risks and rewards.

Through careful analysis, they can make informed decisions about market entry strategies.

Conflict Resolution

In a team environment, critical thinking is used to resolve conflicts and disagreements.

Team members analyze the underlying causes of conflicts and work together to find constructive solutions that promote collaboration and harmony.

Ethical Decision-Making

In a corporate setting, leaders use critical thinking to navigate ethical dilemmas.

They analyze the potential consequences of their decisions on stakeholders, consider ethical principles, and make choices that align with the company’s values.

Continuous Improvement

A company adopts a culture of continuous improvement, encouraging employees to use critical thinking to identify areas for efficiency gains and process optimization.

Through data analysis and problem-solving, employees contribute to ongoing improvement initiatives.

Asking the right questions

Critical thinkers also understand the importance of asking the right questions to arrive at the most accurate conclusion.

Some of the questions that encourage an active line of inquiry include:

Outcome-based questions

When an employee feels they could benefit from the skills or experience of a co-worker, outcome-based questions are ideal.

When someone is asked how they would act in a certain situation, the employee may learn new perspectives or possibilities. 

Structural questions

These questions deal with processes or systems and how they function.

Since processes and systems have been honed over time via trial and error, structural questions reveal efficiencies that can be applied to one’s own endeavors. 

Reflective questions

To develop critical thinking skills based on real-world scenarios, employees can ask someone to reflect on an experience and explain their thought processes at the time.

Open-ended questions

These questions encourage longer, more detailed answers that are more likely to provide useful or relevant insights.

Case Studies

1. NASA’s Apollo 13 Mission:

  • Scenario: During the Apollo 13 mission to the Moon, an oxygen tank exploded, causing a life-threatening crisis. NASA engineers and astronauts had to engage in critical thinking to troubleshoot and devise a solution to safely return the crew to Earth.

2. Toyota’s Production System:

  • Scenario: Toyota’s innovative production system emphasizes continuous improvement and problem-solving. Employees at all levels are encouraged to engage in critical thinking to identify and address production issues, leading to high-quality and efficient manufacturing processes.

3. Financial Investment Analysis:

  • Scenario: Investment professionals apply critical thinking when analyzing financial markets and investment opportunities. They evaluate economic data, company financials, and market trends to make informed investment decisions.

4. Medical Diagnosis and Treatment:

  • Scenario: Healthcare professionals, such as doctors and nurses, employ critical thinking when diagnosing illnesses and determining treatment plans. They gather patient history, analyze symptoms, and consider medical research to make accurate decisions.

5. Legal Case Analysis:

  • Scenario: Lawyers and legal professionals use critical thinking to analyze complex legal cases. They assess evidence, review case law, and develop persuasive arguments to advocate for their clients in court.

6. Environmental Policy Decision-Making:

  • Scenario: Government agencies and environmental organizations engage in critical thinking when crafting policies to address environmental issues. They consider scientific research, economic implications, and societal concerns to develop effective policies.

7. Technology Product Development:

  • Scenario: Technology companies apply critical thinking when designing and developing new products. Engineers and designers evaluate user needs, technical feasibility, and market competition to create innovative solutions.

8. Crisis Management and Public Relations:

  • Scenario: Companies facing crises, such as product recalls or public relations scandals, rely on critical thinking to navigate the situation. They assess the impact, develop communication strategies, and take corrective actions to address the crisis effectively.

9. Social Issues and Advocacy:

  • Scenario: Advocacy groups and nonprofits use critical thinking to address social issues. They analyze research, policy implications, and public opinion to advocate for change and influence policy decisions.

10. Education and Curriculum Development:

  • Scenario: Educators and curriculum designers employ critical thinking when developing educational materials and programs. They consider learning objectives, pedagogical methods, and student needs to create effective learning experiences.

Key takeaways

  • Critical thinking involves analyzing observations, facts, evidence, and arguments to form a judgment about what someone reads, hears, says, or writes.
  • At the core of every critical thinker is the ability to be an active learner who questions ideas and assumptions rather than simply accepting them at face value.
  • Critical thinking is an integral part of business. Just a few of the scenarios where it is effective include recruitment, risk assessment, collaborative problem-solving, and question-based learning or research.

Key Highlights

  • Definition: Critical thinking involves analyzing observations, facts, evidence, and arguments to make informed judgments about information received from various sources.
  • Origin and Definitions: John Dewey introduced the term in 1910 as active, persistent consideration of beliefs. Richard Paul and Michael Scriven defined it as an intellectually disciplined process of analyzing, synthesizing, and evaluating information.
  • Qualities of a Critical Thinker: Active learners who question assumptions, analyze information, determine importance, identify reasoning errors, solve problems systematically, understand the links between ideas, build, recognize, or appraise arguments, reflect on assumptions, and communicate reasoning.
  • Critical Thinking Skills in Business:
    • Evaluation of Alternatives: Accurately evaluating options and prioritizing based on rationale.
    • Decision-Making in Precise Contexts: Using deductive reasoning to anticipate outcomes.
    • Decision-Making in Ambiguous Contexts: Using inductive reasoning in uncertain situations.
    • Problem Analysis: Identifying complex problem components and analyzing them.
    • Decision-Making in Quantitative Contexts: Interpreting and evaluating data for efficient solutions.
  • Examples of Critical Thinking in Business:
    • Risk Assessment: Analyzing legislation impact on wealth management.
    • Recruitment: Using objectivity to select the best candidate.
    • Collaboration and Problem-Solving: Constructively analyzing team contributions.
    • Customer Service Improvement: Analyzing feedback and improving products.
    • Marketing Campaign Analysis: Adjusting campaigns based on data analysis.
    • Supply Chain Optimization: Reducing costs through supply chain analysis.
    • Negotiation Strategies: Analyzing the other party’s interests for better outcomes.
    • Financial Decision-Making: Evaluating investments and strategies.
    • Crisis Management: Assessing crises and developing response plans.
    • Product Development: Identifying market opportunities for new products.
    • Business Expansion: Analyzing risks and rewards for market entry.
    • Conflict Resolution: Using critical thinking to resolve conflicts.
    • Ethical Decision-Making: Navigating ethical dilemmas using analysis.
    • Continuous Improvement: Using data analysis for process optimization.
    • Asking the Right Questions: Using outcome-based, structural, reflective, and open-ended questions for learning and improvement.
  • Key Takeaways:
    • Critical thinking involves actively analyzing and evaluating information.
    • A critical thinker questions assumptions and seeks deeper understanding.
    • Critical thinking is crucial in business for decision-making, problem-solving, conflict resolution, and innovation.

Connected Thinking Frameworks

Convergent vs. Divergent Thinking

Convergent thinking occurs when the solution to a problem can be found by applying established rules and logical reasoning. Whereas divergent thinking is an unstructured problem-solving method where participants are encouraged to develop many innovative ideas or solutions to a given problem. Where convergent thinking might work for larger, mature organizations where divergent thinking is more suited for startups and innovative companies.

Critical Thinking

Critical thinking involves analyzing observations, facts, evidence, and arguments to form a judgment about what someone reads, hears, says, or writes.


The concept of cognitive biases was introduced and popularized by the work of Amos Tversky and Daniel Kahneman in 1972. Biases are seen as systematic errors and flaws that make humans deviate from the standards of rationality, thus making us inept at making good decisions under uncertainty.

Second-Order Thinking

Second-order thinking is a means of assessing the implications of our decisions by considering future consequences. Second-order thinking is a mental model that considers all future possibilities. It encourages individuals to think outside of the box so that they can prepare for every and eventuality. It also discourages the tendency for individuals to default to the most obvious choice.

Lateral Thinking

Lateral thinking is a business strategy that involves approaching a problem from a different direction. The strategy attempts to remove traditionally formulaic and routine approaches to problem-solving by advocating creative thinking, therefore finding unconventional ways to solve a known problem. This sort of non-linear approach to problem-solving, can at times, create a big impact.

Bounded Rationality

Bounded rationality is a concept attributed to Herbert Simon, an economist and political scientist interested in decision-making and how we make decisions in the real world. In fact, he believed that rather than optimizing (which was the mainstream view in the past decades) humans follow what he called satisficing.

Dunning-Kruger Effect

The Dunning-Kruger effect describes a cognitive bias where people with low ability in a task overestimate their ability to perform that task well. Consumers or businesses that do not possess the requisite knowledge make bad decisions. What’s more, knowledge gaps prevent the person or business from seeing their mistakes.

Occam’s Razor

Occam’s Razor states that one should not increase (beyond reason) the number of entities required to explain anything. All things being equal, the simplest solution is often the best one. The principle is attributed to 14th-century English theologian William of Ockham.

Lindy Effect

The Lindy Effect is a theory about the ageing of non-perishable things, like technology or ideas. Popularized by author Nicholas Nassim Taleb, the Lindy Effect states that non-perishable things like technology age – linearly – in reverse. Therefore, the older an idea or a technology, the same will be its life expectancy.


Antifragility was first coined as a term by author, and options trader Nassim Nicholas Taleb. Antifragility is a characteristic of systems that thrive as a result of stressors, volatility, and randomness. Therefore, Antifragile is the opposite of fragile. Where a fragile thing breaks up to volatility; a robust thing resists volatility. An antifragile thing gets stronger from volatility (provided the level of stressors and randomness doesn’t pass a certain threshold).

Systems Thinking

Systems thinking is a holistic means of investigating the factors and interactions that could contribute to a potential outcome. It is about thinking non-linearly, and understanding the second-order consequences of actions and input into the system.

Vertical Thinking

Vertical thinking, on the other hand, is a problem-solving approach that favors a selective, analytical, structured, and sequential mindset. The focus of vertical thinking is to arrive at a reasoned, defined solution.

Maslow’s Hammer

Maslow’s Hammer, otherwise known as the law of the instrument or the Einstellung effect, is a cognitive bias causing an over-reliance on a familiar tool. This can be expressed as the tendency to overuse a known tool (perhaps a hammer) to solve issues that might require a different tool. This problem is persistent in the business world where perhaps known tools or frameworks might be used in the wrong context (like business plans used as planning tools instead of only investors’ pitches).

Peter Principle

The Peter Principle was first described by Canadian sociologist Lawrence J. Peter in his 1969 book The Peter Principle. The Peter Principle states that people are continually promoted within an organization until they reach their level of incompetence.

Straw Man Fallacy

The straw man fallacy describes an argument that misrepresents an opponent’s stance to make rebuttal more convenient. The straw man fallacy is a type of informal logical fallacy, defined as a flaw in the structure of an argument that renders it invalid.

Streisand Effect

The Streisand Effect is a paradoxical phenomenon where the act of suppressing information to reduce visibility causes it to become more visible. In 2003, Streisand attempted to suppress aerial photographs of her Californian home by suing photographer Kenneth Adelman for an invasion of privacy. Adelman, who Streisand assumed was paparazzi, was instead taking photographs to document and study coastal erosion. In her quest for more privacy, Streisand’s efforts had the opposite effect.


As highlighted by German psychologist Gerd Gigerenzer in the paper “Heuristic Decision Making,” the term heuristic is of Greek origin, meaning “serving to find out or discover.” More precisely, a heuristic is a fast and accurate way to make decisions in the real world, which is driven by uncertainty.

Recognition Heuristic

The recognition heuristic is a psychological model of judgment and decision making. It is part of a suite of simple and economical heuristics proposed by psychologists Daniel Goldstein and Gerd Gigerenzer. The recognition heuristic argues that inferences are made about an object based on whether it is recognized or not.

Representativeness Heuristic

The representativeness heuristic was first described by psychologists Daniel Kahneman and Amos Tversky. The representativeness heuristic judges the probability of an event according to the degree to which that event resembles a broader class. When queried, most will choose the first option because the description of John matches the stereotype we may hold for an archaeologist.

Take-The-Best Heuristic

The take-the-best heuristic is a decision-making shortcut that helps an individual choose between several alternatives. The take-the-best (TTB) heuristic decides between two or more alternatives based on a single good attribute, otherwise known as a cue. In the process, less desirable attributes are ignored.

Bundling Bias

The bundling bias is a cognitive bias in e-commerce where a consumer tends not to use all of the products bought as a group, or bundle. Bundling occurs when individual products or services are sold together as a bundle. Common examples are tickets and experiences. The bundling bias dictates that consumers are less likely to use each item in the bundle. This means that the value of the bundle and indeed the value of each item in the bundle is decreased.

Barnum Effect

The Barnum Effect is a cognitive bias where individuals believe that generic information – which applies to most people – is specifically tailored for themselves.

First-Principles Thinking

First-principles thinking – sometimes called reasoning from first principles – is used to reverse-engineer complex problems and encourage creativity. It involves breaking down problems into basic elements and reassembling them from the ground up. Elon Musk is among the strongest proponents of this way of thinking.

Ladder Of Inference

The ladder of inference is a conscious or subconscious thinking process where an individual moves from a fact to a decision or action. The ladder of inference was created by academic Chris Argyris to illustrate how people form and then use mental models to make decisions.

Goodhart’s Law

Goodhart’s Law is named after British monetary policy theorist and economist Charles Goodhart. Speaking at a conference in Sydney in 1975, Goodhart said that “any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes.” Goodhart’s Law states that when a measure becomes a target, it ceases to be a good measure.

Six Thinking Hats Model

The Six Thinking Hats model was created by psychologist Edward de Bono in 1986, who noted that personality type was a key driver of how people approached problem-solving. For example, optimists view situations differently from pessimists. Analytical individuals may generate ideas that a more emotional person would not, and vice versa.

Mandela Effect

The Mandela effect is a phenomenon where a large group of people remembers an event differently from how it occurred. The Mandela effect was first described in relation to Fiona Broome, who believed that former South African President Nelson Mandela died in prison during the 1980s. While Mandela was released from prison in 1990 and died 23 years later, Broome remembered news coverage of his death in prison and even a speech from his widow. Of course, neither event occurred in reality. But Broome was later to discover that she was not the only one with the same recollection of events.

Crowding-Out Effect

The crowding-out effect occurs when public sector spending reduces spending in the private sector.

Bandwagon Effect

The bandwagon effect tells us that the more a belief or idea has been adopted by more people within a group, the more the individual adoption of that idea might increase within the same group. This is the psychological effect that leads to herd mentality. What in marketing can be associated with social proof.

Moore’s Law

Moore’s law states that the number of transistors on a microchip doubles approximately every two years. This observation was made by Intel co-founder Gordon Moore in 1965 and it become a guiding principle for the semiconductor industry and has had far-reaching implications for technology as a whole.

Disruptive Innovation

Disruptive innovation as a term was first described by Clayton M. Christensen, an American academic and business consultant whom The Economist called “the most influential management thinker of his time.” Disruptive innovation describes the process by which a product or service takes hold at the bottom of a market and eventually displaces established competitors, products, firms, or alliances.

Value Migration

Value migration was first described by author Adrian Slywotzky in his 1996 book Value Migration – How to Think Several Moves Ahead of the Competition. Value migration is the transferal of value-creating forces from outdated business models to something better able to satisfy consumer demands.

Bye-Now Effect

The bye-now effect describes the tendency for consumers to think of the word “buy” when they read the word “bye”. In a study that tracked diners at a name-your-own-price restaurant, each diner was asked to read one of two phrases before ordering their meal. The first phrase, “so long”, resulted in diners paying an average of $32 per meal. But when diners recited the phrase “bye bye” before ordering, the average price per meal rose to $45.


Groupthink occurs when well-intentioned individuals make non-optimal or irrational decisions based on a belief that dissent is impossible or on a motivation to conform. Groupthink occurs when members of a group reach a consensus without critical reasoning or evaluation of the alternatives and their consequences.


A stereotype is a fixed and over-generalized belief about a particular group or class of people. These beliefs are based on the false assumption that certain characteristics are common to every individual residing in that group. Many stereotypes have a long and sometimes controversial history and are a direct consequence of various political, social, or economic events. Stereotyping is the process of making assumptions about a person or group of people based on various attributes, including gender, race, religion, or physical traits.

Murphy’s Law

Murphy’s Law states that if anything can go wrong, it will go wrong. Murphy’s Law was named after aerospace engineer Edward A. Murphy. During his time working at Edwards Air Force Base in 1949, Murphy cursed a technician who had improperly wired an electrical component and said, “If there is any way to do it wrong, he’ll find it.”

Law of Unintended Consequences

The law of unintended consequences was first mentioned by British philosopher John Locke when writing to parliament about the unintended effects of interest rate rises. However, it was popularized in 1936 by American sociologist Robert K. Merton who looked at unexpected, unanticipated, and unintended consequences and their impact on society.

Fundamental Attribution Error

Fundamental attribution error is a bias people display when judging the behavior of others. The tendency is to over-emphasize personal characteristics and under-emphasize environmental and situational factors.

Outcome Bias

Outcome bias describes a tendency to evaluate a decision based on its outcome and not on the process by which the decision was reached. In other words, the quality of a decision is only determined once the outcome is known. Outcome bias occurs when a decision is based on the outcome of previous events without regard for how those events developed.

Hindsight Bias

Hindsight bias is the tendency for people to perceive past events as more predictable than they actually were. The result of a presidential election, for example, seems more obvious when the winner is announced. The same can also be said for the avid sports fan who predicted the correct outcome of a match regardless of whether their team won or lost. Hindsight bias, therefore, is the tendency for an individual to convince themselves that they accurately predicted an event before it happened.

Read Next: BiasesBounded RationalityMandela EffectDunning-Kruger EffectLindy EffectCrowding Out EffectBandwagon Effect.

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