One of my favorite optical illusions is  Shepard’s “Turning the Tables”, an interactive illusion with tables that appear to be of different dimensions but are in fact identical. The site allows visitors to test the visual effect for themselves. Although the tables are identical in size, our eyes remain convinced otherwise.  Click here to see what I mean.  It’s extraordinary how knowing the truth doesn’t necessarily prevent us from making mistakes in our thinking.

Psychological research on human judgment indicates that people rely on mental shortcuts or heuristics to make decisions. These shortcuts often serve us well, but sometimes they can produce illusions that trick our minds, just as optical illusions can fool our eyes.

So, as you negotiate, make decisions, or try to resolve a dispute, be aware of the following cognitive illusions that can obscure your judgment.

Confirmation bias. Confirmation bias is the tendency to search for evidence or interpret information in a way that confirms your own conclusions or supports what you already think, while rejecting evidence that contradicts your conclusions. For negotiators, this is particularly dangerous, because accurate and complete information can protect you from making bad decisions or leaving value on the table.

Attribution bias. Blame for behavior placed on personality traits rather than on the circumstances that may have caused the behavior. We tend to blame our own errors on the circumstances and blame the errors of others on their personality traits. (For example: “I’m having personal financial difficulties due to the economy; you’re just a deadbeat.” Or, “I acted like that because I’m having a bad day. You on the other hand have no excuse – you’re a jerk.”)

Reactive devaluation. Reactive devaluation (PDF) is the tendency to devalue or discount a proposal simply because the person who proposed it is someone we don’t much like.

“Fixed pie” bias. Assuming that there is a “fixed pie” of resources or only one issue to resolve, and that the only option is to grab the biggest piece possible. This approach overlooks the fact that many negotiations involve multiple issues and that trade-offs are possible.

Anchoring. A tendency to stick with our first idea or dollar figure. Once that initial idea or figure is set, we tend to be biased toward that figure. In an experiment conducted by behavioral economist Daniel Ariely, when participants were asked for the last two digits of their social security numbers, those numbers turned out to influence how much participants were willing to spend on certain items. Thinking of those numbers set an anchor point for price.

Implicit bias. We’re all biased to some extent. The difficulty is that our biases are sometimes unconscious, operating contrary to our conscious intention, leaving us unaware that we even hold them. (In fact, while we may be quick to spot bias in others, oddly enough we have a blind spot for our own bias.) Bias can be costly, imposing what researchers have described as a “stereotype tax“, affecting everything from negotiating to hiring decisions. Unconscious bias can exclude qualified people from jobs or roles; because of biases and assumptions about their counterpart on the other side of the table, negotiators are more likely to leave value on the table. Test yourself for your own hidden biases at Project Implicit.

Overconfidence effect. The tendency to be overconfident about the correctness of one’s answers or viewpoints or one’s ability to perform a task. For example, in numerous studies, a large majority of subjects place themselves in the statistically impossible top percentile when it comes to things like driving skills, intelligence, negotiating abilities, even humor. As two Cornell University researchers put it, most of us are unskilled and unaware of it (PDF).