Distinction Bias

When we directly compare our options, we become hypersensitive to any differences that exist between them. This makes the differences seem glaringly obvious and causes us to view them as more important than they actually are. To go back to the previous example, we might convince ourselves that there is no way we could possibly enjoy a cup of coffee unless it is extra strong, even though we usually have no problem with the weaker coffee from the café near our work. 

When making decisions where the stakes are greater than a cup of coffee, distinction bias can be quite detrimental. For example, it can cause us to go over budget when shopping for things like a new car or television. While we might have been thrilled with the cheaper model when viewing it on its own, when viewing it in comparison to the more expensive model, it may seem lackluster. As a result, we might decide to splurge on the pricier model unnecessarily. 

The negative implications of distinction bias at the individual level can add up to challenges on a larger scale. Take, for example, agents, who make decisions on the behalf of other people, who are referred to as principals. Agents include people like parents, lawyers, and policymakers, while their respective principals include children, clients, and constituents. It has been found that, when agents engage in joint evaluation, they tend to select options with outcomes that principals rate as less favorable. 

This effect is observed even when the interests of the agents are aligned with those of the principals, which supports the hypothesis that these poor decisions were the direct result of joint evaluation and not the result of conflicts of interest. This is because we tend to engage in joint evaluation when making a decision, but when experiencing the outcome of that decision, we engage in separate evaluation. In this example, the agents overvalued the differences between the options, while the principals were able to assess each option individually.¹ This illustrates how distinction bias can skew decision-making, especially when the person making the decision is not the one who has to live with the outcome. 

The theory behind distinction bias was developed quite recently, so not much research has been conducted on the matter. Part of what gives rise to this bias is the disconnect between our prediction of which option will lead to the most favorable outcome and our actual experience of choosing that option. Furthermore, this bias is driven by the fact that, when we directly compare two options, we tend to focus on specific details, instead of judging each option holistically. 

Sometimes, we aren’t nearly as smart as we think we are. Many people are confident that they know what they want, and feel able to predict how satisfied they will be with a given outcome. Unfortunately, the truth of the matter is that our powers of prediction are not all that accurate.

This is tied to another cognitive bias, referred to as impact bias. The theory behind this bias asserts that we tend to overestimate the impact that future events will have on our emotional state.² While this is a separate concept from distinction bias, they are related. As explained by C.K. Hsee and J. Zhang in their paper, “Distinction Bias: Misprediction and Mischoice Due to Joint Evaluation,”³ which pioneered the study of distinction bias, when it comes to decision-making, prediction and experience are two very different things. 

When we are weighing our options, we are in the prediction stage. Here, we tend to use joint evaluation. We may predict that the differences between the options will have a significant impact on our satisfaction in the long term. This causes us to assign greater value to the qualitative differences between the options when making our decision. Once we have made our choice and are living with the consequences of it, we are in the experience stage. At this point, we are more likely to use separate evaluation, since we have settled on one option. Now, we may realize that the qualitative differences between the two options were not as important as we had predicted them to be. We may even realize that we made the wrong decision, for example, going over budget to buy the fancier television, but then realizing that its special features do not better our life in any way. The prediction was that the extra frills would make us happy, but our experience shows that they were completely unnecessary. It turns out that we’re not always so great at knowing what will make us happy.

When we engage in joint evaluation and directly compare two options, we have a tendency to hone in on the finer details. Small differences between the options seem like determining factors in the decision-making process. That’s not to say that you shouldn’t take several factors into consideration before making a decision. However, issues arise when we break each option down into smaller parts, which are then magnified and overvalued. 

Nitpicking makes small differences seem more important than they actually are. For example, when buying a new television, you may find yourself comparing two models: a more expensive one that comes with lots of extra features, or a cheaper, smaller and simpler one. Looking at them side-by-side, you might be impressed by the higher resolution and better speakers on the more expensive television. You might also find that the cheaper television looks ridiculously small beside the larger model. By focusing on all these aspects, you might actually convince yourself to buy the more expensive television. However, when you take a more holistic approach to decision-making, you may come to a different conclusion. Examining the more expensive television as a whole might still impress you, but when you look at the cheaper television holistically, you may recognize that it actually has everything you were looking for - plus, it fits your budget. 

When we engage in joint evaluation, we tend to reduce options to their parts, which makes every difference seem like a game changer. Sometimes, it’s better to take a simpler approach and make a choice based on what option is best for you as a whole. Directly comparing two options can cause us to zero in on minute details, which in turn leads us to overvalue things that may actually not be of any real consequence to us.

We make dozens of decisions each day. Some of these are minor, like the decision of what kind of drink to order at the local café. Others have greater impact, such as deciding which university to attend. It is important to make these decisions effortfully, instead of falling back on automatic biases. Awareness of distinction bias can guide us towards making decisions based on separate evaluations instead of joint evaluations, thereby ensuring that we are choosing a certain option because we actually feel it is what’s best and not because of how it differs from the alternative.

The key to avoiding distinction bias is to stop comparing options side-by-side. Joint evaluation, or examining options simultaneously, causes us to view our options as more dissimilar. Separate evaluation, or examining each option on its own, allows us to view each option as its own independent unit. By eliminating this side-by-side comparison, we’re less likely to overvalue the differences between our options. 

Furthermore, separate evaluation allows us to form a holistic opinion of each option. Recognizing the pros and cons of our options on their own allows us to make a decision that is in line with our goals and values and respects any constraints we may be subject to. 

Hsee and Zhang developed the theory of distinction bias in their 2004 paper, “Distinction Bias: Misprediction and Mischoice Due to Joint Evaluation.”⁴ This focus of this paper was how joint evaluation can lead to misprediction or inaccurate predictions, and mischoice, or choosing the wrong option. Their theory was that “the evaluation mode in which choices and predictions are made is often different from the evaluation mode in which experience takes place". Specifically, when choosing between the options available to us, we tend to use joint evaluation, while, when experiencing the outcome of our decision, we tend to use separate evaluation. They posited that, due to distinction bias, joint evaluation can lead to both misprediction and mischoice, while the subsequent separate evaluation causes us to see the error in our ways.

In their foundational paper, Hsee and Zhang⁵ conducted a series of studies. In one, they split participants into two groups. Those in the first group had to recall a situation where they failed, and were rewarded with 15 grams of chocolate. Participants in the second group had to remember a situation where they were successful, and were rewarded with five grams of the same chocolate. Before the task, participants were asked to predict the impact the experience of recalling the memory and eating the chocolate would have on their affect. They were also asked to rate their mood after the task. Participants tended to over-predict the effect the chocolate would have on their mood. The results showed that changes in participants’ moods were driven by the type of memory they recalled - not the amount of chocolate they had. Those who recalled a failure reported more negative mood at the end of the session than those who recalled a success, despite the fact that they got more chocolate.

Participants in this study attributed too much value to the quantity of chocolate they received. They predicted that getting 15 grams of chocolate would lead to more positive mood than getting only five grams of chocolate but, as it turned out, the difference in the amount of chocolate did not matter at all. Their experience of the task was determined by whether or not they were remembering a past success or failure; the chocolate had no influence over it. This is an example of how comparing two options directly - in this case, more chocolate versus less chocolate - can lead us to overestimate the importance of the differences between them. 

Distinction bias can affect many areas of our lives. It often comes into play when we’re searching for a new home. During the process of looking for a new place to live, we might find ourselves comparing two potential options. To an extent, this is a good thing. It’s valuable to assess the pros and cons of each option and evaluate which best meets our needs, but taking the comparisons too far can lead to poor decisions. 

When it comes down to it, is it really worth paying more for a few extra square feet that we don’t really need? Or high ceilings that, while they look nice, probably aren’t all that important? Remember that our predictions of how much these factors will matter to us aren’t usually very reliable. If you were actually to move into the house with slightly more square footage, you probably wouldn’t care so much about the extra space, but you might not be too happy about the price. Before you start looking for a place to live, make a list of your requirements. These can be aesthetic, for example. You might want a home with lots of counter space in the kitchen, or about things like location and your budget. Knowing what you’re looking for will help you avoid giving too much weight to minute differences between your various options.

What it is

We have the tendency to view two options as more distinctive when we evaluate them together than we do when we evaluate them separately.

Why it happens

Our predictions of what will make us happy don’t always turn out to be accurate. This disconnect, in combination with our tendency to compare specific parts of the options we’re given, rather than form holistic impressions of each option on its own, give rise to distinction bias.

Example 1 - Distinction bias and reward

When we evaluate two options simultaneously, we magnify the differences between them and think they matter more than they actually do. Hsee and Zhang⁶ illustrated this in a study where participants in one condition had to remember a past failure and were rewarded with a greater amount of chocolate and participants in a second condition had to remember a past success and were rewarded with less chocolate. Participants predicted that the amount of chocolate they got would influence their mood, but it did not. Their experience of the task was influenced by the kind of memory they remembered. The difference between the chocolates was irrelevant. 

Example 2 - Choosing a new home

When looking for a new place to live, we often compare our options, which can cause us to overvalue the differences between them. This can lead to us spending more money for something that we thought was worth it, but that turns out to be not all that important.

How to avoid it

Instead of evaluating our options simultaneously, we should look at them separately. This will make the small qualitative differences between them less obvious and allow us to make a decision unimpeded by distinction bias.