How To Get Over Ourselves to Get Ahead
Former $WHALE mod Iluscavia previously hosted $WHALE’s “NFA — Not Financial Advice” video series. Here, he dropped knowledge regarding a host of different financial and business ideologies and how they apply to the NFT scene. Iluscavia has been working in TradFi for over 16 years, with a background in capital markets.
$WHALE community member Phoenix is a thought leader on asymmetric strategy and strategic theory.
The collaboration between these two brings the NFT community useful insights into ourselves, the market and how to trounce obstacles both inner and outer on our trip to the moon and beyond.
The Behavioral Bias segment as seen below will be discussed in this and subsequent articles because of the sheer volume of its content.
To get a visual representation of the biases our brains are naturally pulled into, check out this intricate graphic released by The Visual Capitalist website.
There are five biases addressed in this particular video: confirmation bias, loss aversion, herd mentality (FOMO) bias, projection bias and anchoring bias.
Part 1 of this article series will address confirmation bias and herd mentality bias.
TLDR
- seeking information out that validates already held beliefs is endemic of a confirmation bias
- when you’re unaware that you’re operating according to a confirmation or any other bias, you can’t analyze things as they really are
- playing devil’s advocate, or executing a “Hegelian Dialect” could help you find a middle ground closer to the truth of a situation
- FOMO is a prime example of the intrinsic push herd mentality creates
- crowdsourcing has its place but again, playing devil’s advocate is a way to sharpen the lens and stay on top of the truth
Confirmation Bias
The Bias
“We all sort of have this tendency to go out and seek things that validate our own personal beliefs, our own cultural ideas, political ideas, religious ideas and anything that confirms that for us, we’re gonna assign validity to them even though something might not be true or ideal,” explains Phoenix.
“When you think of what it is that makes up your mental state, your interpretation of the world, your filter, your lens, whatever it is — you think whatever it is that you’ve learned is going to directly shape how you make observations. It’s going to shape how you see things. It’s going to have a direct effect as you look from the inside out.”
The Detriment
When someone only wants to see something that already confirms their initial beliefs, it detracts from the ability to interpret things that have an ambiguous meaning. If one can’t disconnect from their belief system (including expectations, values and background) while looking at something, the inability to cut these mental ties impedes the possibility to see that thing as it really is.
The Solution
It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so. — Mark Twain (maybe)
Awareness
One has to be mindful of this natural handicap in order to guard against it. The first step in that is admitting that the tendency exists in everyone and that we are all prey to it. If that fact is internalized and added to your lens, so to speak, it will be easier to break down an issue and disconnect from it objectively.
“Basically, challenge yourself to put something to the test. — Phoenix
Challenge Yourself
Take something you believe. Play devil’s advocate. See what middle ground you come to between the two opposing viewpoints. Phoenix mentions the philosophical tool the “Hegelian Dialect” as a more intellectual way of explaining the procedure, but that’s basically all you have to do.
The more you think you know, the less you know, however.
Phoenix points out that “specialists actually wind up leaning more toward being susceptible to confirmation bias because they know their (respective) domain(s) so well. They tend to look for things that wind up confirming what they already know and when presented with information that’s out of the out of the norm, they may or may not know how to react.”
If you find it too threatening to challenge your pre-existing mental models, you’re not going to be in control of your biases and your view of the world will be tainted.
No one is saying that you have to completely overthrow your way of life and your principles in order to do this. But if you really want to get a clear picture of something, you need to be able to look at it on its own without making it all about you and what you think. It takes courage to do so and a willingness to be humble.
Getting Feedback From Frens
Iluscavia suggests speaking to a trusted adviser and/or a good friend to get objective feedback on whether or not you are falling prey to a confirmation bias.
Herd Mentality (FOMO) Bias
“When everybody thinks alike, everyone is likely to be wrong.” — Humphrey B. Neill
The Bias
Phoenix breaks it down: “We’re animals, right? We look for social proof. We like to be part of the club. Nobody necessarily wants to go against the herd. (The FOMO), the missing out is essentially watching everybody else get something or do something or benefit from something and be afraid that you’re not going to be included yourself, that you’re missing an opportunity where you could interact with somebody else on some kind of a commonality.”
He goes on to explain that social media has made this mentality much more of a factor in dictating behavior and how it is particularly pernicious in the NFT space.
NFTs serve a dual purpose of status symbol and financial FOMO. How many of us have felt the bleak emptiness in the pit of our stomachs realizing we missed out on buying a Bored Ape or a Clone-X when we had the opportunity to get in at the start?
Both of these factors integrate to provide a social credibility (real or imagined) that is a powerful impetus to action within the scene.
The Solution
“What if everyone else was jumping off the bridge? Would you do it, too?” — Phoenix’s Mom
Awareness
We need to know and recognize that as societal animals these pressures constantly bombard us. The need for social confirmation is embedded in our psyches.
Devil’s Advocate
It is a different type of difficulty to challenge a thought when it is held by everyone in the community you deem yourself part of. If you engage in the contrary thinking we have been discussing and it leads you somewhere else than the path all your friends are running down, you are going to have to have the courage to actually go your own way.
Crowdsourcing
In Yiddish, there is a phrase that “If two people tell you you’re drunk, then go to bed.” This illustrates that there is a concept Iluscavia mentions in the video where if many people look at a specific situation and all see the same thing, it may well be valid.
But again the answer lies in being humble. You have to be willing to say that either way, you could be wrong.
The Solution
Phoenix explains, “I think that’s what comes with taking the antithesis and working back to a synthesis (as per the “Hegelian Dialect” mentioned above). That’s how I’ll pivot. That’s how my mind will change. That’s how I grow — by having previous models tested and shattered.
“You have to have the humility to admit that you don’t know everything and that you could be, in fact, wrong and open to the possibilities because it’s the only way that you’d benefit from growth and change.”
Iluscavia sums it up nicely: “A flexible mindset that’s open to ideas and and different inputs gives you optimal flexibility to maybe guard against (these two biases).”
Reading List
Phoenix specifically recommends the book “The Art of Contrary Thinking” by Humphrey Bancroft Neill for more insight into these two biases and how to crush them like bugs.
This article was originally published on Medium in August, 2022. The interview was conducted many months before its publication. Part 2 is forthcoming.
