Confirmation Bias: Definition and Examples
Recognizing confirmation bias and knowing how to overcome it can prevent its detrimental effects on decision-making.
Chris Hinsch, Ph.D.
Robert R. Johnson
Jason Blumstein, CFA
What Is Confirmation Bias?
Confirmation bias refers to the tendency to seek information or opinions that confirm existing beliefs. The person favors information that reaffirms their views and rejects those contradicting their beliefs.
Confirmation bias can affect various aspects of life. For instance, it can play a role in financial decision-making involving purchases and investments. Politics also shows the impact of confirmation bias.
Processing new information based on certain biases comes with disadvantages. It tends to limit a person’s perception in an echo chamber, making it difficult to view things from a different perspective.
Understanding confirmation bias and how you can overcome it can help you make more rational decisions.
Understanding Confirmation Bias
A person’s experiences and observations help shape their beliefs, which can affect how they perceive things. This is also how biases are created.
People exhibiting confirmation bias may display certain traits. For instance, they tend to selectively seek out information based on their existing views. They can overvalue claims supporting their beliefs and disregard contradictory evidence, often refusing to listen to the opposing side.
There are also cases wherein the manifestation of confirmation bias is subtle. Such is the case for memories. Some people may recall data or events differently. They remember incidents in a way that supports what they already believe.
For personal and emotionally-charged issues, the effects of this phenomenon are stronger. That’s especially true for deeply entrenched beliefs.
Financial decisions may also be affected by confirmation bias. This is something that’s explored in behavioral finance, which studies the relationship between individual psychology and financial choices. For example, investors influenced by confirmation bias analyze the companies they’ve already invested in and interpret information confirming their beliefs. They may even ignore negative news.
Some people may confuse confirmation bias with anchoring bias. While both refer to the role of biases in evaluating situations and decisions, anchoring bias refers to the tendency to rely on the first piece of information encountered and not on existing beliefs.
In certain situations, confirmation bias may be viewed positively. For some people, having information that proves their ideas right can alleviate stress and boost self-esteem. It can also be used to promote good ideas among groups of people that share the same viewpoints.
Most people aren’t consciously making biased decisions. Confirmation bias is typically done subconsciously. The best way to avoid it is to become more aware. Understand all aspects and seek information from different sources.
Types of Confirmation Bias
There are different types of confirmation bias. These can be divided into three categories — bias in research, interpretation and memory recall. Each area focuses on a particular aspect of processing information or data.
The table below breaks down these categories of confirmation bias to help you better understand how this phenomenon manifests.
Bias in Research
When forming conclusions or making decisions, people rely on available information. Bias in research refers to an individual being one-sided when searching for information that supports what the person already believes. This can manifest in the way the person phrases questions. Instead of looking for all relevant data, the person asks questions in a way that reflects their preferences. Subsequently, yielding answers that support their hypotheses.
Bias in Interpretation
Confirmation bias can also occur in the interpretation of information. When this happens, the individual interprets the data with bias. For instance, if a piece of information proves or supports their existing beliefs, they tend to favor this evidence. On the other hand, information that challenges or opposes their preconceived notions causes discomfort. In response, they may disregard or criticize the information.
Bias in Memory Recall
Memory can be affected by confirmation bias. Two individuals may remember an incident differently because people recall the past in a way that’s colored by their perception and what they currently believe. Bias in memory recall can also affect what things a person remembers. People tend to forget evidence contradicting their beliefs and recall the details that support their biases.
Confirmation Bias in the Real World
Confirmation bias can affect how a person views various aspects of life, including politics, religion and day-to-day decisions like buying car insurance. Issues can arise when their biases prevent them from changing their perspective even when presented with facts and evidence.
Here are some real-world examples:
Stock Message Boards and Electric Vehicles
The Internet has made financial information more accessible. People can find loads of financial information online. A study by the University of Miami and the University of Texas at Austin found that investors use message boards to seek information confirming their beliefs. Consequently, they ignore information that could potentially help their investing strategy.
For example, if investors believe that the electric vehicle space will grow, they’ll only read message boards speaking favorably about the industry. This can be problematic because investors should analyze positive and negative outlooks before making decisions.
The Teacher’s Self-Fulfilling Prophecy
An individual’s confirmation bias can sometimes be so strong that beliefs come true. Since Rosenthal & Jacobson’s “Pygmalion in the Classroom” experiment (1968), many studies have shown how teachers’ expectations affect students’ results. For instance, when teachers expect students to succeed, they do. Conversely, students tend to fail when teachers believe they will.
Teachers have a confirmation bias. They treat students more favorably when these students are perceived as having a higher chance of receiving good grades, even if these expectations are false. Teachers not only look for student attributes confirming their beliefs but will act in a way to bring them out.
Social Media’s Influence on US Politics
The use of social media further helped the prevalence of confirmation bias. Social media platforms are designed to show content that makes users feel good. To this point, social media articles, comments and pictures that confirm the viewer’s existing beliefs are often made more accessible.
Social media companies, such as Facebook, Snapchat and Twitter, take advantage of people’s confirmation bias. For example, USC Professor Kristina Lerman, whose research focuses on the structure of modern social networks, observed that social media strengthens political divisions in the U.S. Republicans only see pro-republican news and the same for democrats. This creates the illusion that everyone agrees with the user’s views and fortifies one’s inability to see the other side’s argument.
Partisan Media Impacts Voting Behavior
Media can also contribute to the effects of confirmation bias. Fox News viewers tend to vote republican, while CNN viewers tend to vote democrat.
In a study by David E. Broockman & Joshua L. Kalla (2022), die-hard Fox news viewers who typically vote republican changed their views after watching a month of CNN instead. These viewers changed their confirmation bias to democratic news rather than republican. After watching a month of CNN, the viewers favored the Republican Party’s politics significantly less.
How to Reduce Your Confirmation Bias
Overcoming confirmation bias can help you make more rational decisions. While this may be challenging, it’s possible.
It’s important to remember that exhibiting confirmation bias is often not due to a conscious effort. That means awareness is key. You have to be more observant when making decisions. Look at other points of view and listen to opposing arguments. Being open to various information channels can also help.
Here are some tips to help you get started:
Acknowledge Confirmation Bias
The first thing you need to do is assess yourself. As a human being, accept that you tend to exhibit confirmation bias. For instance, when making financial decisions, determine if past financial traumas are preventing you from achieving financial stability.
Look At Other Points of View
Consider looking at things differently. Explore new ideas. Ask someone with a contradictory opinion to share their insights. While this may make you uncomfortable at first, it allows you to understand the reason behind their opinion.
Do Your Research
Hearing what other people have to say can help you form opinions. However, it’s best not to rely solely on them. Check the facts yourself. Weigh all sides before drawing a conclusion. For instance, if someone you look up to says that investing in a certain stock will help you succeed, you shouldn’t immediately follow their advice without verifying the reliability of their information.
Be Open to Various Information Channels
Relying on one source of information prevents you from looking at things rationally. When conducting research, use different sources of information. Visit multiple websites, check news articles and watch shows you used to avoid. Interpret information with an open mind.
It helps to question the information that comes your way. Don’t simply accept them as facts. When asking questions, avoid those that lean towards answers you expect. For instance, instead of asking why a person believes something, you should ask them to share what led them to that conclusion.
Confirmation Bias FAQ
Knowing what confirmation bias is and how it works can help you better understand what factors may affect your decisions. Below are some of the questions people usually ask about confirmation bias.
The concept of confirmation bias can be easy to understand, but identifying it and learning how to combat it can be challenging. MoneyGeek asked industry experts for their insights on confirmation bias and its effects.
- How dangerous is confirmation bias if left unchecked?
- How can confirmation bias affect investment behavior?
Professor at Grand Valley State University - Seidman College of Business
Retired Financial Planner & Financial Coach
CEO & Founder of Julius Wealth Advisors, LLC
Professor of Finance at Creighton University
Confirmation bias is only one of the factors that can affect a person’s way of viewing things and making decisions. Below is a list of resources that can help you make well-informed financial decisions.
- Herd Instinct: Behavioral finance tackles the relationship between a person’s psychology and their finances. Find out what herd instinct is and how it affects people’s views.
- How Debt Can Harm Your Health: Debt and financial stress can affect your physical and mental health, influencing your finances. Get tips on how to cope with debt stress.
- How You Can Hold Yourself Accountable with Your Money: Putting money management concepts into practice can be difficult. Find out how you can achieve your financial goals and stay accountable with your money.
- Mental Accounting: People may be influenced by how they perceive items when categorizing money. Learn about this concept, its impact on investment decisions and how you can avoid mental accounting bias.
- Recovering From a Shopping Addiction: Although enjoyable, shopping can also become an addiction. Learn the signs of a shopping addiction, its effects and how to recover from it.
- The Psychology of “Treat Yourself”: Treating yourself can be an issue if it breaks the bank. Understand the psychology behind it and find ways to manage splurges.
About Nathan Paulus
- Broockman, D., & Kalla, J. "The Impacts of Selective Partisan Media Exposure: A Field Experiment with Fox News Viewers." Accessed June 23, 2022.
- Gentrup, S., Lorenz, G., Kristen, C., & Kogan, I. "Self-fulfilling Prophecies in the Classroom: Teacher Expectations, Teacher Feedback and Student Achievement." Accessed June 22, 2022.
- Park, J., Konana, P., Gu, B., Kumar, A., & Raghunathan, R. "Confirmation Bias, Overconfidence, and Investment Performance: Evidence from Stock Message Boards." Accessed June 22, 2022.