Alex Edmans on Confirmation Bias

How hard do we fight against information that runs counter to what we already think? While quantifying that may be difficult, Alex Edmans notes that the part of the brain that activates when something contradictory is encountered in the amygdala - “that is the fight-or-flight part of the brain, which lights up when you are attacked by a tiger. This is why confirmation can be so strong, it's so hardwired within us, we see evidence we don't like as being like attacked by a tiger.” 

In this Social Science Bites podcast, Edmans, a professor of finance at London Business School and author of the just-released May Contain Lies: How Stories, Statistics, and Studies Exploit Our Biases – And What We Can Do About It, reviews the persistence of confirmation bias -- even among professors of finance. 

“So, what is confirmation bias?” he asks host David Edmonds. “This is the temptation to accept something uncritically because we'd like it to be true. On the flip side, to reject a study, even if it's really careful, because we don't like the conclusions.” 

Edmans made his professional name studying social responsibility in corporations; his 2020 book Grow the Pie: How Great Companies Deliver Both Purpose and Profit was a Financial Times Book of the Year. Yet he himself encountered the temptation to both quickly embrace findings, even flimsy ones, that support our thesis and to reject or even tear apart research, even robust results, that doesn’t. 

While that might seem like an obviously critical thinking pitfall, surely knowing that it’s likely makes it easier to avoid. You might think so, but not necessarily. “So smart people can find things to nitpick with, even if the study is completely watertight,” Edmans details. “But then the same critical thinking facilities are suddenly switched off when they see something they like. So intelligence is, unfortunately, something deployed only selectively.” 

Meanwhile, he views the glut of information and the accompanying glut of polarization as only making confirmation bias more prevalent, and not less. 

Edmans, a fellow of the Academy of Social Sciences and former Fulbright Scholar, was previously a tenured professor at the Wharton Business School and an investment banker at Morgan Stanley. He has spoken to policymakers at the World Economic Forum and UK Parliament, and given the TED talk “What to Trust in a Post-Truth World." He was named Professor of the Year by Poets & Quants in 2021.