First impressions count, wouldn't you agree?
After all, how many times have you met someone and immediately felt an affinity ... or thought to yourself, "Wow, this person is nothing like me"?
It's a fairly common phenomenon -- but did you know it can also affect how fair you are in hearing someone out? It's a decision-making bias that's so common even the Supreme Court is guilty of it.
In-group bias: Even on the Supreme Court
When we think someone is part of our "in-group," or, in other words, one of us, we're more likely to believe what they have to say. So, for example, if the person you just met has some advice for how to cure your dog's indigestion, you might give them more credence if you think of them as similar to you.
If you think you're above this kind of bias, think again: even the justices of the Supreme Court have been shown to fall prey to in-group bias.
A study looking at decisions made in First Amendment cases over the last 60 years found something surprising: The liberal or conservative ideology of a justice doesn't matter as much as whether the ideology of the petitioner matches that of the justice.
In other words, being liberal doesn't mean always supporting free speech, and being conservative doesn't always mean wanting to regulate it. Rather, if the petitioner is liberal, a liberal justice is more likely to support the expression claim, similarly, if a petitioner is conservative, a conservative justice is more likely to support the claim.
Where does this tendency come from?
The fact is that we tend to be predisposed to people who are like us.
Think about it: If you meet someone who is largely like you on a basic level (same profession, same school, same hometown, etc.) you might be rather predisposed to think that he or she is pretty alright without even knowing the first thing about him or her.
It's related to our preference for arguments or ideas that support the opinions we already have. Essentially, we give more credence to information that supports our pre-existing notions than to information that goes against them -- just like with in-group bias, we simply like what's familiar and agreeable.
The obvious problem
Of course, just because someone is like you doesn't make their argument valid or their character good -- and of course, the same goes for someone who is unlike you. And just because you have an opinion about something, that doesn't make it true, much as you might want it to be.
In other words, aside from the potential for grave unfairness, both of these biases severely limit our ability to understand the world and make good decisions -- not just in finance, but across the board.
Overcoming your bias
One way to eliminate in-group bias is to add more people to your in-group so you experience a wider range of opinions all within your circle of trust.
You've probably noticed that killer networkers and socializers have an eerie ability to make people feel like they've been friends for years. Their strategy? Find commonalities in interests, experiences, or beliefs.
Once you've identified something you have in common with another person, they're suddenly closer to being part of your in-group, regardless of where they come from and what they believe. You might find that something as simple as having a toddler, or enjoying fine wine, or having lived in New York in the 1960s can bridge enormous gaps.
If you can learn to embrace people as part of your in-group for any and all reason, you stand a better chance of learning from disconfirming information they may present to you. In the end, this is your best bet to overcome confirmation bias.
This strategy means deliberately seeking out arguments, evidence, opinions, and facts that go against whatever it is you believe. Make it a game, if you like: For every big decision you need to make, try to find one or two powerful arguments against whatever course of action looks the best to you. You don't have to change your mind, just entertain the counter-argument honestly and thoroughly.
It is a humbling, frustrating, and terribly time-consuming habit to build -- clearly, even Supreme Court justices haven't mastered the art of avoiding confirmation bias. However, with practice, you'll not only get better at seeing past your biases, you'll become a much better decision-maker overall -- and perhaps a better socializer as well.