All of us are of diminished capacity when cognitive biases degrade our thinking, and one way to fight cognitive biases is to expose our thinking to the scrutiny of others, as was done in the recent debate on Paternalism. In all of our thinking, whether we are thinking of taking cocaine or Dr. Quacko’s Snake Oil Miracle Tonic, or gambling with futures options or roulette wheels, we are subject to cognitive biases. For example, for gambling we humans are subject to the following biases: gamblers fallacy, clustering illusion, availability heuristic, attentional bias, illusory correlation, ludic fallacy, optimism bias, overconfidence effect, positive outcome bias, rosy retrospection, and the Texas sharpshooter bias.
To help us avoid these biases we have hired representatives, who create agencies (like the FDA and the SEC) with committees and subcommittees that debate the issue: they put on seminars and conferences and write working papers and white papers and cost/benefit analyses, and invite comments, etc, in short, consider the matter in depth, and then decide to ban certain drugs or activities, and not others. We voters ratify this every 2 years, except when we change our mind, as with alcohol, tobacco, or thalidomide.
Besides saving our lives, minds and fortunes, a side benefit is savings for us citizens in information costs, because we citizens don’t have to read all the papers, and a good thing too, because we have to use our time to make profits, the froth from which is used to pay our representatives. (We also save on decision costs.)
All this we do because we know we have many selves within ourselves, including a short term self who wants to snort cocaine, and guzzle Dr. Quacko’s Tonic because ‘everyone’s doing it’ (the bandwagon bias), and try our luck with porkbellies, who has a bad case of the Bias Blind Spot (the meta-bias which makes us think we don’t have to compensate for our cognitive biases) VS. a long-term self, who knows it has cognitive biases and knows it can’t overcome them, not alone, it needs help.