The Influence Of Cognitive Biases On Decision-Making And Risk Perception

Abstract

Cognitive biases are systematic patterns of deviation from norm or rationality in judgment, whereby inferences about other people and situations may be drawn in an illogical fashion. These biases play a significant role in decision-making processes and in shaping how individuals perceive risks. This article explores the influence of cognitive biases on decision-making and risk perception, with particular emphasis on how these biases manifest in the context of Pakistani society. By reviewing the literature and synthesizing various findings, this study highlights the impact of biases such as overconfidence, anchoring, and availability heuristics on personal and organizational decision-making. Furthermore, it discusses the implications of these biases in areas such as financial decisions, healthcare, and safety, and proposes strategies to mitigate their negative effects. The article also examines the relationship between cognitive biases and risk perception, considering how cultural, social, and psychological factors influence these biases in a Pakistani context.