11 Common Cognitive Biases of Product Managers

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As product managers, it is essential to acknowledge that everyone has a subjective view of the world, making it impossible to share a single worldview. Thus, different individuals may have varying perceptions of the same object, and reducing such differences becomes critical to aligning with users.

1. Curse of Knowledge

The curse of knowledge occurs when we are unable to imagine not knowing something once we learn it, which makes it difficult for us to share this knowledge with others. In certain industries, professionals use specific abbreviations or terms to reduce communication costs among colleagues. However, this can lead to difficulties in communication with non-professionals, especially when it comes to error messages or prompts that users may not understand. To avoid this, product managers should ask themselves whether non-professionals can understand the prompts and, if not, adjust them accordingly.

2. Availability Heuristic

The availability heuristic refers to the tendency to use information that is easily accessible in our minds to infer actual events. People often give too much weight to information that is easy to retrieve in memory, leading them to believe that recent, frequent, extreme, and memorable events are more common and important than others. Product managers can use this to their advantage by sending timely reminders to users during important festivals or displaying new features on the homepage more frequently to increase user engagement.

3. Bandwagon Effect

The bandwagon effect occurs when individuals are influenced by a group and change their opinions or behavior to align with the majority. To take advantage of this effect, product managers can display dynamic prompts on the product page, such as the number of orders and positive reviews, to create the illusion of being part of a crowd and increase the desire to buy.

4. Chice-Supportive Bias

Choice-supportive bias occurs when we tend to praise the option we chose and downgrade others after making a decision. To overcome this bias, product managers must have empathy and consider various scenarios and user roles to choose the best solution for all parties involved.

By understanding and avoiding these cognitive biases, product managers can create products that resonate with users and achieve greater success.the interests of multiple parties.

5. Anchoring Effect

The Anchoring Effect occurs when people make a quantitative estimate of an event, and they use a specific value as the starting point. This value, known as the anchor point, restricts the estimated value. When making decisions, we tend to over-bias the previously obtained information as a reference, even if it is irrelevant to the decision. This advantage allows us to make quick decisions based on anchor points.

For example, Starbucks often sells expensive mineral water, which costs much more than the usual brand, C'estbon. The purpose is to set an anchor point to highlight the low price of Starbucks coffee. This principle is usually used for cognitive bias in consumption scenarios, amplifying the perception of discounts through before and after comparisons, to encourage users to make decisions that benefit the business. Therefore, when setting prices, we often use a crossed-out original price as an anchor point to promote product conversion.

6. Decoy Effect

The Decoy Effect occurs when people choose between two similar options, and the addition of a third new option (decoy) makes an old option more attractive. The option that is helped by the “bait” is usually called a “target,” while the other option is called a “competitor.”

For example, a store may sell hats and sweaters together with the prices marked on the labels: 39 yuan for the hat and 199 yuan for the sweater. However, they may also add a line at the end, which reads: "Hat + sweater = 199 yuan," meaning that it is almost equal to buy one and get one free.

This method is effective because people often compare items to determine their value. Therefore, with the comparison of the first two unit prices, the latter "buy one and get one free" is more attractive. These "routines" are also prevalent on the internet and should be used with caution.

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7. Distinction Bias

The Distinction Bias occurs when there are comparison items, and people become sensitive to small differences, even if the differences are not significant.

For instance, when recharging the phone bill, there may be a little price difference between various payment methods. For example, paying with a bank card is 2 cents cheaper, and paying with a China Construction Bank card is 3 cents cheaper. If people have already bound these bank cards, they are more likely to use these preferential payment methods.

This inspires businesses to offer a little more discount than other similar functions when accessing a new function. By doing this, users will notice the difference, even if it is a small one. This increases the chances of users choosing to use the new feature.

8. Endowment Effect

The Endowment Effect occurs when an individual owns an item, and their evaluation of the item's value is higher than before they owned it. This phenomenon is explained by the theory of "loss aversion" in behavioral finance. It suggests that a certain amount of loss brings people more utility reduction than the same gain brings people utility increase.

Therefore, in the decision-making process, people tend to consider avoiding harm more than seeking benefits. Out of fear of loss, people often charge exorbitant prices when selling goods. This inspires businesses to encourage users who like the product or approve of the product to share it. This way, the evaluation becomes more subjective, and it becomes more convincing for consumers when they recommend it.

9. Functional Fixedness

Functional Fixedness refers to the tendency of individuals to see only the common functions of a certain thing when solving problems and fail to see the possible functions of other aspects. People develop fixed views over a long period regarding the function or use of something. For instance, in Stephen Chow's movie "From China with Love," the character played by Stephen Chow uses a leather shoe as a hair dryer, which most people would not have thought of because their inherent impression of shoes is a psychological obstruction. It causes individuals to show rigid thinking when solving problems and to lack flexibility in the use of tools. Although this example is humorous, it underscores the importance of avoiding functional fixedness.

When considering competing products, it is not enough to consider only the industry track. One must regularly monitor potential other track competitions; otherwise, one may be defeated by other opponents without realizing it.

10. Barnum Effect

The Barnum Effect refers to the phenomenon where people accurately evaluate personality descriptions that they believe fit their situation, even if the descriptions are vague and universal, making them suitable for many people. This effect is responsible for many pseudosciences, such as astrology, divination, and psychological tests. The effect explains why many people believe that fortune tellers speak "very accurately" after consulting them. People who seek help from fortune tellers often have the characteristic of being easily suggestible. In reality, fortune tellers tell everyone the same content, which consists of general and vague descriptions.

When designing product copy, it is best to avoid using descriptions such as "everyone, customers, users" and instead use descriptions such as "you, your" to shorten the distance between the product and the user. People have a sense of selective substitution when understanding normative information, which makes them unconsciously focus on choosing what fits their own cognition and experience. This sense of substitution leads to a "me too" sense of belonging and avoids users from alienating from the platform.

11. Framing Effect

The Framing Effect refers to the phenomenon where people make different decision-making judgments on different descriptions of the same problem. For example, a water cup may sell for 32 yuan in store A, and customers who spend 32 yuan will receive a beautiful water cup sleeve. In store B, the water cup may sell for 30 yuan, but customers must pay an additional 2 yuan to receive the beautiful water cup sleeve. Although the cost of the water cup plus the sleeve is the same in both stores, most people find store A more attractive than store B because store A is associated with a benefit (a gift of a beautiful water cup sleeve), while store B is associated with a loss (an additional 2 yuan).

Studies show that people pay much more attention to "loss" than equivalent "gain" when measuring a transaction, about 2.5 times, which is called "loss aversion." Therefore, merchants should bundle their products with "income" instead of "loss" when pricing or promoting to effectively stimulate consumers to consume.