One of the biggest financial failures in American history began at 8 a.m. on the 13th of September 2008, when Henry Paulson, the Secretary of the U.S. Department of the Treasury, Ben Bernanke, the chairman of the Federal Reserve System, and Timothy Geithner, who was president of the New York Federal Reserve, where working hard trying to find a way to rescue the Lehman Brothers Investment Bank. At the time the U.S. government was the only one to intervene in order to aid the collapsing institution.

Finally, the U.S. authorities declined to offer a bailout and allowed the institution to fail. The usual explanation of Paulson and Bernanke ever since is that the Fed had no legal authority to save Lehman Brothers. But the justification was completely different at the time of the incident, when a concern on public resources had become central at the Treasury with Henry Paulson explaining in 2010 that: “I never once considered that it was appropriate to put taxpayer money on the line in resolving Lehman Brothers’’.

Another key element of the resolution to let Lehman Brothers fail was that the policymakers thought, or at least hoped, that Lehman’s bankruptcy would not severely damage the financial system. It has been estimated by some commentators that the debt of LBHI was no more than $60 billion and a government-sponsored wind-down, with limited guarantees, might have cost only $ 100 billion. The fact that wasn’t taken into consideration was the betting on Lehman's demise. Examining the LBHI case we wonder how is it possible for decision-makers of such a status to make judgments that lead to dire consequences. In general, we need to ask ourselves how we select and interpret information, which can have a dramatic effect on our daily lives, on our jobs, or on the environment.

Although there is a huge body of work on effective decision-making for teams and individuals, there is not enough awareness of the way cognitive biases affect our decisions and our practices.

Here’s a list of the most common cognitive biases:

• We tend to be willing to gather facts that support certain conclusions but disregard other facts that support different conclusions.

• We become stuck to thought patterns that we have used in the past in the face of new circumstances.

• We tend to distort our memories of chosen and rejected options to make the chosen options seem more attractive

• We automatically favour the opinions of those we sympathize who are most like us, or who belong to our groups.

• We underestimate uncertainty, while at the same time, we tend to possess illusory control beliefs over future events and potential problems

• We tend to attribute our success to our abilities and talents, while we ascribe our failures to bad luck and external factors.

• We tend to engage in behaviors that elicit results that will confirm our beliefs (self-fulfilling prophecy)

While reading this wide range of biases we will surely agree that such prejudices exist and they have been stuffing up our thinking and have led us to irrational judgments. Sometimes these biases are fairly obvious, and we might even find that we recognize these predispositions but most of the time they are so subtle that they are almost impossible to notice, despite their huge impact on decision-making. Unconscious bias is created and reinforced by our background, cultural environment, experiences, and personality type and can infect our visual perception, attention, or even our memory. It is often interpreted as the first impression and intuition we have when interacting with other people.

While we might all like to believe that we are open-minded, the sad fact is that we are constantly under the influence of prejudices, but we are not willing to admit it. Most of us are convinced that our beliefs are based on rational reasoning because we think we are full- informed, we are sure we can evaluate the data, and feel we are in control of the decision-making process. Even if we are warned of our prejudices, even if someone points out our preconceived opinions, even if we acknowledge that in the past we have made decisions based on our bias we will keep on using these thought patterns, we have built up over time believing that the present situation is different.

Each time we make a choice, we seem to forget the stereotypes that are deeply ingrained into our thinking and emotions. We are sure that we are better than most people at not falling victim to bias.

Whatever way we choose to deal with hidden bias, we should begin with the acknowledgment that it exists in all organizations and on all teams. Through various forms of training, we can realize and accept its huge impact, and learn to watch for it as much as possible. Addressing these forces that dominate the choices we make, should be recognized as part of necessary organizational change, leading to the enhancement of inclusivity and, ultimately, better decision-making.