We like to think that we make our decisions logically and based on facts. The truth however is vastly different. Our actual decision making is far from scientific, and is subject to a whole variety of biases, external influences, emotions, psychological and other factors that often have little to do with a logical interpretation of information at hand.
Uncertainty: Making better decisions starts with understanding this: uncertainty can work a lot of mischief. Decisions are bets on the future, and they aren’t ‘right’ or ‘wrong’based on whether they turn out well on any particular iteration. An unwanted result doesn’t make our decision wrong if we thought about the alternatives and probabilities in advance and allocated our resources accordinglyAnnie Duke – Author – Thinking in Bets
Confirmation bias: Confirmation bias is probably the single biggest problem in business, because even the most sophisticated people get it wrong. People go out and they’re collecting the data, and they don’t realize they’re cooking the books.
Confirmation bias = hunting for information that confirms our initial assumptions (which are often self-serving)
Preventive vs Promotion bias: Psychologists have identified two contrasting mindsets that affect our motivation and our receptiveness to new opportunities: a “prevention focus,” which orients us toward avoiding negative outcomes, and a “promotion focus,” which orients us toward pursuing positive outcomes.
Chip Heath – Author – Decisive / Switch / The Power of Moments
Mindless Choosing: Mindless Choosing The cashew problem is not only one of temptation. It also involves the type of mindless behavior we discussed in the context of inertia. In many situations, people put themselves into an “automatic pilot” mode, in which they are not actively paying attention to the task at hand. (The Automatic System is very comfortable that way.)
Social practices: Social practices, and the laws that reflect them, often persist not because they are wise but because Humans, often suffering from self-control problems, are simply following other Humans. Inertia, procrastination, and imitation often drive our behavior.
Social influences: Social influences come in two basic categories. The first involves information. If many people do something or think something, their actions and their thoughts convey information about what might be best for you to do or think. The second involves peer pressure. If you care about what other people think about you (perhaps in the mistaken belief that they are paying some attention to what you are doing—see below), then you might go along with the crowd to avoid their wrath or curry their favor.Richard H – Author – Nudge
Reflexive vs Deliberate: Our thinking can be divided into two streams, one that is fast, automatic,and largely unconscious, and another that is slow, deliberate, and judicious. The first system, the reflexive system, seems to do its thing rapidly and automatically, with or without our conscious awareness. The second system, the deliberative system . . . deliberates, it considers, it chews over the facts.Annie Duke – Author – Thinking in Bets
Confirmation bias is probably the single biggest problem in business, because even the most sophisticated people get it wrong. When people have the opportunity to collect information from the world, they are more likely to select information that supports their preexisting attitudes, beliefs, and actions.
Thinking for others vs ourselves: When we think of our friends, we see the forest. When we think of ourselves, we get stuck in the trees. Ask yourself, What would I tell my best friend to do in this situation?
Paradox of Choice: A classic study by Columbia’s Sheena Iyengar and Mark Lepper monitored the behavior of consumers in a grocery store. One day, the store set up a sampling table with 6 different kinds of jam, and customers loved it; another day, the store set up a table with 24 different kinds of jam, and it was even more popular than the first. The surprise came at the cash register: Customers who’d chosen among 6 jams were 10 times more likely to actually buy a jar of jam than customers who’d chosen among 24! It was fun to sample 24 flavors, it seems, but painful to pick among them. The choice was paralyzing.
Familiarity Bias: we like what’s familiar to us;
Loss aversion: losses are more painful than gains are pleasant.Chip Health – Author – Decisive: How to Make Better Choices in Life and Work
20 Cognitive Biases that Impact your Decisions (Infographic)
Recommended Books – Facts, Fictions & Biases
Other concepts on Change
Whenever you try to do anything of importance, you will always stumble upon people waiting to tell you why it cannot be done. Often, these people are the ones closest to us, including our close friends and family. To succeed in any venture, you have to learn to disregard the inevitable negative voice of critics and forge ahead on your own path.
Our decisions determine our results. A key aspect of improving our decision making, is to follow a clearly defined process, that lays adequate importance to each step involved in our coming to decisions. By improving our decision making process, we can make better decisions, helping ultimately to better results and outcomes.