DECISION MAKING

Faulty Decision Making

• GUT INSTINCTS

• UNCONSCIOUS DECISION MAKING TRAPS

Five Habits of Bad Decision Making

Fixing the problem too fast Communicating ineffectively Paying more attention to some

individuals than is warranted •Using beliefs and guesswork

instead of facts•Not knowing the limits of your

decision making authority

HEURISTICS

UNCONSCIOUS ROUTINES

• Sensory Preception• Biases• Irrational Anomalies

COMMON DECISION MAKING TRAPS

ANCHORING• Giving disproportionate weight to the

first information that is received.

• Stereotyping skin color, clothing, or accent

DECISION TRAPS

HOW CAN WE REDUCE THE IMPACT OF ANCHORING ?

• Be open-minded• seek information and opinions from a

variety of people to widen your frame of reference

• offer objective information when seeking advice from someone else, just the facts

DECISION TRAPS

REMEMBER: • WHOEVER MOST VIVIDLY

CHARACTERIZES THE SITUATION USUALLY ANCHORS THE OTHER’S PERCEPTION OF IT.

THE STATUS QUO TRAP

INSTINCTIVELY STAYING WITH WHAT IS FAMILIAR• Look for decisions that involve the

least change• avoid changing the status quo• avoid rocking the boat

STATUS QUO TRAP

Think first of your goals when preparing to make a decision

Review how goals are served by the status quo as compared to a change

Look at each possible change, one at a time

STATUS QUO

Never think of the status quo as your only alternative

ask yourself if you would choose the status quo if it weren’t the status quo

STATUS QUO

Avoid the tendency to exaggerate the effort, cost or emotional reaction if you change from the status quo.

If several alternatives are superior to the status quo, avoid the tendency to fall back to the same old tried and true method

DECISION TRAPS

JUSTIFYING PAST ACTIONS

The more actions that you have already taken on behalf of a choice or direction, the more difficult you will find it to change direction or make a different choice.

PAST ACTIONS

TO OVERCOME JUSTIFYING PAST ACTIONS:

• Make a conscious effort to set aside your past actions

• Seek out and listen to people who were uninvolved with the earlier decisions

• Deal with your wounded ego

PAST ACTIONS

WHEN YOU FIND YOURSELF IN A HOLE, THE BEST THING YOU CAN DO IS STOP DIGGING

CONFIRMING EVIDENCE TRAP

WHEN WE LOOK FOR INFORMATION TO SUPPORT OUR EXISTING POINT OF VIEW WHILE AVOIDING INFORMATION THAT CONTRADICTS IT

CONFIRMING EVIDENCE TRAP

TWO FORCES AT WORK• Tendency to subconsciously decide

what we want to do before we figure out why we want to do it

• Tendency to be more engaged by things we like than by things we dislike

AVOIDING THE CONFIRMING EVIDENCE TRAP

Always check to see whether you are examining all the evidence with equal enthusiasm

Avoid the tendency to accept confirming evidence without question

Get someone you respect to play devils advocate

AVOIDING THE CONFIRMING EVIDENCE TRAP

Be honest with yourself about your motives

Don’t ask leading questions that make your decision evident

THE FRAMING TRAP

How you make a decision is often determined by how you view your choices or how you frame the questions around it

Frames That Can Distort Decision Making

Frames as a gain or loss• Most people don’t like to take risks

and will look for ways to turn down or avoid a decision where a loss is possible, even if a larger chance exists for a large gain.

Framing

People tend to adopt the framing of the situation as it is presented to them, rather that restating the problem in their own way

Framing

Don’t automatically accept the initial frame

Try to look at the problem or opportunity in several ways and invision different outcomes.

Estimating and Forcasting Trap

Three ways we make mistakes in forcasting:

• Overconfidence:• We believe we are better at forecasting than

we really are

• Prudence:• When faced with a high stakes decision we

tend to stay on the safe side

• Recallability• We tend to be overly influenced by past events

REMEMBER

Look around you and notice these traps

Before you make a decision, take time to review how you’re making it.

Don’t get emotionally attached to one outcome before you’re sure your decision making process serves you well.