Decision making is flawed on certain occasions, due to bias in mind and not because of an erroneous decision making process. There could be sensory misperceptions, biases, irrational anomalies in our thinking. These are ingrained deep in our minds and we often fail to see them. The best solution is being well aware of the traps and training the mind into making sound decisions.
The Anchoring Trap- First impressions, initial estimates, or data anchor current decisions and estimates made. Anchors can be as harmless as a comment offered by a co-worker or an article appearing in a magazine or as dangerous as a stereotype about a person’s skin color, accent, ethnicity, clothes etc. One common type of anchor is any historical event or trend. One can avoid this trap by carefully considering all possible alternatives and perspectives, being open minded, brainstorming, analyzing and inferring on your own before blindly trusting other person’s suggestions, thinking through your stance before crucial negotiations and use it to your advantages.
The Status Quo- Sticking with the status quo represents, in most cases, the safer course because it puts us at less psychological risk. Other experiments have shown that the more choices you are given, the more pull the status quo has. Ways to avoid this trap is to remind yourself of your goals and examine how they would be served by the status quo., think about all possibilities, ask yourself if there wasn’t a status quo would you still choose that, remember desirability of status quo changes over time, avoid emphasizing of cost and effort in switching from status –quo.
The Sunk Cost Trap – to make choices in a way that justify past choices. To avoid this trap seek the help of those uninvolved in those previous decisions, Examine why admitting to an earlier mistake distresses you, do not cultivate a failure-fearing culture.
The Confirming-Evidence Trap- This bias leads us to seek out information that supports our existing instinct or point of view while avoiding information that contradicts it.There are two psychological
forces at work here. The first is our tendency to subconsciously decide what we want to do before carefully thinking it through. The second is our inclination to things we like than by things we dislike. To avoid this, one needs to be true to themselves, check to consider all evidence fairly, get someone play devil’s advocate.
The Framing Trap – The way a problem is framed can have a serious impact on the choices one makes. To avoid the trap, do not blindly accept initial frame of the problem, and pose problems in neutral, challenge other people with different frames.
There are certain traps that crowd our ability to assess probabilities associated like
The Overconfidence Trap- being overconfident about your decisions and accuracy. Eg: money is wasted on faulty projects because managers did not accurately account for the possibility of a market downturn.
The Prudence Trap. In this trap one is over conscious and alert, this forecasting trap can add enormous costs with no practical benefit.
The Recallability Trap- frequently base our predictions about future events on our memory
Of past events, we can be overly influenced by incomparable and different or dramatic event.