Survivorship bias occurs because we tend to focus on the survivors, while forgetting about the ones who didn't make it. This bias can have a significant impact on the way we think and make decisions.

What is survivorship bias?

Survivorship bias is a cognitive bias that causes us to overestimate the number of successful outcomes in a given situation. For example, let's say you're considering starting a new business. You might look at successful businesses and think that the odds of success are high.

But you're forgetting about all of the businesses that have failed. The survivorship bias causes us to overestimate our chances of success, while underestimating the risk of failure.

The impact of survivorship bias on decision-making

Survivorship bias can have a significant impact on the way we think and make decisions. In many cases, it leads us to underestimate risk. For example, let's say you're considering investing in a new company. You might look at the companies that have been successful and think that the odds of success are high.

But, again, you're forgetting about all of the companies that have failed. The survivorship bias causes us to underestimate the risk of investing in a new company.

How to avoid survivorship bias

There are several ways that you can avoid survivorship bias in your own thinking. One way is to focus on the entire population, rather than just the survivors. For example, if you're considering investing in a new company, look at the entire population of companies, rather than just the successful ones. This will help you to get a more accurate picture of the risks and rewards associated with investing in a new company.

Another way to avoid survivorship bias is to use statistical methods to correct for it. This will help you to get a more accurate picture of the risks and rewards associated with investing in a new company.

Most importantly, you can avoid survivorship bias by being aware of it. Once you're aware of the survivorship bias, you can take steps to avoid it in your own thinking.