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What is the Halo Effect?

The halo effect is a cognitive bias in which a positive impression of a person, brand, or product in one area positively influences our feelings in all other areas. This means we use a small amount of data to make an overall judgment of that person, brand, or product.

As a result, we make decisions or conclusions without logical reasoning which can hinder our ability to think critically about other peoples’ traits.

For example, a startup that has received significant media attention or has high-profile investors may be viewed as more innovative or successful than other startups, even if they have not yet demonstrated any notable achievements.

Also, companies that are associated with a popular trend or buzzword benefit from the halo effect. We currently see it happening with startups that claim to use artificial intelligence (AI) in their product being perceived as more cutting-edge and worthy of investment even if their AI capabilities are limited.

Why does the Halo Effect exist?

The halo effect exists because human social perception is a constructive process. When we form perceptions of others, we tend to create an image that suits what we already know, instead of relying on objective information. This is one reason why brand positioning is so important in marketing—it creates a positive image of the brand in customers’ minds.

It also serves as an explanation of how our own biases and assumptions influence our thinking and behavior.

It is important to recognize and account for the halo effect in situations where you’re evaluating people or things, such as in hiring, marketing, or investments. Being aware of its influence ensures that you are more critical when making decisions, rather than being swayed by an initial positive impression.

Origin of the Halo Effect 

In some cases, the halo effect is also referred to as known as “halo error.” It was first introduced in a 1920 research paper, “A Constant Error in Psychological Ratings”, written by psychologist Edward Thorndike.

To explain the phenomenon, he referenced a study in which commanding officers in the army were asked to rate their subordinates for Physical Quality, Intelligence, Leadership, Personal Qualities, and General Value to the service. The superiors were instructed to evaluate each of the qualities independently. 

After the ratings were concluded, it was observed that, even in the case of the most conscientious superiors, the correlations between the qualities were too high and too even. For instance, in the case of one of the superiors, the correlations of the Intelligence rating with the ratings for Physique, Leadership, and Character for his subordinates were .51, .58, and .64 respectively. 

Thorndike thought that the correlations between the qualities were too close because, “in reality, Intelligence and Character or Intelligence and Leadership should give about three times as close a correlation as Intelligence and Physique.” 

The conclusion was that “even a very capable foreman, employer, teacher, or department head is unable to treat an individual as a compound of the qualities and to assign a magnitude to each of these in the independence of the others.” This is because the halo of good qualities that the individual possesses is often extended to the ratings of other qualities.

Examples of the Halo Effect

The halo effect is present across all areas of life, work, and business. Here are a few examples to help you understand what it looks like in different contexts. 

Brand Reputation: A company with a strong and positive brand reputation may be viewed as more trustworthy and reliable, even if some of its products or services are not up to par.

Influencer Marketing: Influencer marketing relies on the halo effect of a popular and well-regarded social media influencer to boost the perceived value and credibility of a product or service they endorse.

CEO/Founder Effect: The success and charisma of a company’s CEO or founder can create a halo effect, leading people to assume that everything the person does must be good, even if some of their products or services are lacking.

Product Design: The halo effect can also play a role in product design and product adoption, where a well-designed product may be perceived as having higher quality, regardless of its actual performance or functionality.

User Experience: The user experience of a website or app can also be affected by the halo effect. A visually appealing and easy-to-use interface may create a positive impression that carries over to the overall perception of the product or brand. However, in most cases, using A/B testing tools is the best way to determine what influences user behavior.

Why is the Halo Effect important?

Knowing about the halo effect means that you can use it to your advantage. It can help you to:

Improve your leadership

To be a good leader, you need to be able to evaluate people objectively. Awareness of the halo effect, as well as daily self-reflection, will put you on the lookout for bias in yourself or your teammates and ensure that everyone is treated fairly. 

Enhance marketing tactics

Understanding the halo effect can help you to use it to market your services/products more efficiently. User research can help you identify which features are likely to exert a halo effect on your customers. You can then use this information while designing the product/service or optimizing content. Of course, this doesn’t mean that you should compromise the quality of your product or make false claims in order to improve sales.

Strengthen relationships

Now that you know about the halo effect, you should try to make a positive first impression in order to start your relationships on the right foot. You can also work on that tense relationship with your co-workers—you might have formed an impression of them that might not be 100% accurate.

How to Avoid the Halo Effect

Consciously assess your biases

We’ve all fallen into the trap of judging someone or something based on a bias. Sometimes, even when building or developing strategies for a product, you might jump to conclusions about what customers want based on your personal experiences. 

To avoid this, it would be helpful to do the research required to understand what drives customer behavior and in the case of judging someone,  identify qualities that we might have a potential bias for and make a conscious effort to prevent our judgments from being suffused by the halo of this bias.

Develop objective parameters for evaluating performance

How do you evaluate the performance of an employee, a product, or a service? How do you determine how your product meets customers’ needs? It should not be based on gut feeling or instinct as these forms of evaluation can be weakened by the halo effect. 

Instead, develop clear parameters that you will use for assessments. The parameters will vary depending on what you’re assessing but make sure that they’re objective. The following questions might guide you in developing your own parameters:

  • What do I believe to be accurate about this person/product/service?
  • What conclusions have I drawn about this?
  • What assumptions have I made?
  • What assumptions can I validate?
  • What assumptions can I not support?
  • What information did I use to arrive at these assumptions?
  • Did I look at the complete picture? 

Offer opportunities for everyone

Another way of avoiding the halo effect is to create opportunities for everyone to contribute. This could involve making sure that each person has a specific task, giving each person a chance to contribute during a meeting and more.

You should also consider slowing down your thought process and gathering all the facts before making a decision and looking for independent evidence instead of making sweeping generalizations. Remember, a lot of people suffer from imposter syndrome and you need to look for opportunities to help strengthen people’s belief in their abilities. 

Conclusion: Avoid the Halo Effect to avoid bias

To avoid the halo effect in decision-making, it’s important to consider multiple sources of information and to evaluate each attribute or characteristic independently, rather than relying on a single impression or trait. 

By being aware of this effect and consciously working to avoid it, you’ll be able to make more accurate and objective decisions about people, investments, or opportunities.

Alberto Moreno

Alberto works as a content creator at DemandPlaybook, where he's deeply committed to developing 'reader-first' SEO content. He explores topics such as search engine optimization, content strategy, e-commerce trends, and insights into social media marketing.