A cognitive bias refers to a shortcut in mental thinking and decision making whereby inferences about other people and situations may be drawn in a somewhat illogical and rash fashion, but may still be highly effective in the evolutionary survival of the individual and species.  Individuals create their own subjective reality from their perception of their environmental surrounding and social input. Cognitive biases can be highly useful in certain contexts, particularly those that require quick decision making when timeliness is more important than accuracy. Cognitive biases are thought to be the result of the brain’s limited capacity for information processing, so the brain has evolutionarily developed these mental shortcuts, also called heuristics, for us to interpret and understand the world around us. These cognitive biases must have been successful because, as mentioned in Chapter 2, we are now the only surviving human species on the planet.

Here is further discussion on cognitive bias as presented in Wikipedia and other sources:

A cognitive bias is a systematic pattern of deviation from norm or rationality in judgment. Individuals create their own "subjective social reality" from their perception of social input. An individual's construction of social reality, not the objective input, may dictate their behaviour in the social world. Thus, cognitive biases may sometimes lead to perceptual distortion, inaccurate judgment, illogical interpretation, and stereotyping, when we assign something to a particular category or class, especially in a manner that is too rigid or exclusive and fails to reflect actual complexities.

Some cognitive biases are presumably adaptive. Cognitive biases may lead to more effective actions in a given context.  Furthermore, cognitive biases enable faster decisions when timeliness is more valuable than accuracy. Other cognitive biases are a "by-product" of the limitations of human processing, resulting from a lack of appropriate mental mechanisms (bounded rationality), or simply from a limited capacity for information processing.

A continually evolving list of cognitive biases has been identified over the last six decades of research on human judgment and decision-making in cognitive science, social psychology, and behavioral economics. Kahneman and Tversky (1996) argue that cognitive biases have efficient practical implications for areas including clinical judgment, entrepreneurship, finance, and management.

Note that this is a general description of cognitive bias. See and click on the Cognitive Bias Index by John Manoogian below for more detail:

Note that there are over 200 ways that we can bias our interpretation. Note also that most of the time our perceptions are spot-on, we have our act together, but remember the hot and cold water test?  That may not always be the case.

Chapter 3

What is Cognitive Bias?