The hidden traps in decision making

The hidden traps in decision making

1. The root of the problem lies in the minds of the decision makers

   • The status quo
     • The anchoring
       • We base our decisions on what has been told to us.
         • What can we do about it?
           • Change perspectives
             • Consult yourself first.
               • Be open minded
                 • Dont reveal to much to your consultants, this can lead your idea to be the main one.
                   • Think through your position first
     • The sunk cost
       • The confirming-evidence
         • The framing
           • The estimating and forecasting
             • You base your decisons on your calculations
               • The prudence trap
                 • The overconfidence trap
                   • leads to missing great opportunities or put yourself at risk
                 • The recallability trap
                   • A dramatic event distorts your thinking process
                     • What can I do about it?
                       • Reduce overconfidence
                         • State your estimates honestly
                           • Do not get influenced by your memory
                 • Chosing the “safe side”.
           • You see yourself caught in many options
             • Different reference points
               • emphazises the real financial impact of the decision.
                 • What can I do about it?
                   • Don´t automatically accept the initial frame
                     • Stay neutral
                       • Think hard throughout your decision- making process
                         • Examine the way they frame the problem.
             • Gains vs losses.
               • A problem is posed in terms of gains
         • leads us to seek information that prove our points, avoiding others opinions.
           • What can we do about it?
             • Examine all the evidence with rigor
               • Get someone to judge these decisons, to make you answer all the questions there migt be behind.
                 • Be honest with yourself about your motives
                   • Don´t surround yourself with “Yes sir” people.
       • We get stuck because we think our past alternatives are always right, even if they are no longer valid.
         • What can we do about it?
           • Listen to different views of people that were never invived before
             • Admit earlier mistakes
               • Look for recommendations made by your subordinates/co-workers
                 • Dont cultivate a failure fearing culture.
     • We carry biases (judgements) so we fall in our comfort zones to protect our ego from damages
       • What can we do about it?
         • Remind yourself of your main goals
           • Never think of the status quo as your only alternative
             • Ask yourself if you would chose this option even if it wasnt “the status quo”
               • Avoid exaggerating costs and effort
                 • think about the long term benefits. Never
                   • Never rely on this alternative only because you have a hard time picking the right one.