Managing Cognitive Bias in Fraud Investigations 

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ACFE Community Manager 

Rihonna Scoggins 

When investigating fraud, it is important that the investigator be able to think clearly and make unbiased decisions. Cognitive bias is when an investigator's own assumptions or beliefs impact their judgment of information and evidence. For example, an investigator may assume that because someone comes from a certain social class or background that they would not commit fraud. An assumption like this may prevent them from looking at other possible explanations for what happened. 

It is important for an investigator to recognize any biases they may have and be aware of how these may impact the investigation. Investigators must: 

  • Understand the concept of cognitive bias. 

  • Be aware of how cognitive bias can impact an investigation. 

  • Know how to avoid cognitive bias. 

Confirmation bias 

Investigators should also be aware that the more they look into something, the more they will find it. This leads to a confirmation bias; investigators develop a hypothesis and then look only for evidence that supports their theory. This has been shown to be especially true in investigations where there is a lack of evidence or conflicting accounts of what happened. It is important to remember that this can skew findings and lead investigators down an unproductive path as they attempt to understand what happened in any given situation. 

Another problem occurs when investigators rely on their own experiences to make decisions about a certain case, which can cause tunnel vision. Basically, past experiences can lead to a cognitive bias when investigating new information or events. This type of thinking can cause an investigator to miss important details because they don't fit into their preconceived notion. 

Seeing patterns 

Investigators tend to see patterns where none exist. When looking at a complex set of data, the investigator might come up with a simple common-denominator explanation that could overlook more likely explanations. To avoid making this mistake as an investigator, consider how well your hypothesis fits with the rest of your evidence before you finalize it in your report. 

Permission bias 

Permission bias happens when investigators give too much weight to the opinion of an authority figure, an expert whose opinion they trust. The investigator must decide whether they want their judgment to be influenced by another's opinion. 

If you have not had training with a particular tool or method and do not know how to use it, be wary of using that tool or method until you receive proper training for it. By knowing your own skills and limitations and seeking help from those who are more knowledgeable than yourself in specific areas of expertise, investigators can avoid errors due to permission bias during investigations. 

Anchoring 

An anchor is a reference point that we use to make sense of ambiguous information. For example, an investigator may estimate an unknown amount using a well-known reference as their anchor point; unfortunately, this may limit their ability to adjust their thinking about the estimates after they form a first impression about it. 

The more complex the investigation, the more likely it is that cognitive biases will affect an investigator's decision-making process.