How We Sometimes Fool Ourselves When Making Decisions
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by Kare Anderson, Author & Speaker
Think back on a decision you made in the past that cost you dearly in sales or
a valued relationship. Consider some smaller decisions where you realize in
retrospect that, if you’d made another choice, you’d have saved time or avoided aggravation.
What if you found out that your mind played tricks on you? You could have
thought things out better, and made a wiser choice? Perhaps you were relying
on your "gut instincts" yet, in fact, were fooled by unconsious decision-making traps we fall into when trying to figure out what we should do.
According to one of my all-time heroes, negotiations guru, Howard Raiffa, we
are destined to repeat the same faulty decision making process and face more
grief from the poor results if we don’t gain insights into some of these traps.
According to Raiffa, the fault often lies not in the decision-making process but rather in the mind of the decisionmaker. The way the human brain works can sabatage our decisions. Here’s some insights into the most well-documented traps we set for ourselves in making decisions.
The Routines of Decision Making
- Be open minded. Seek information and opinions from a variety of people to
widen your frame of reference, without dwelling disproportionately on what you
heard first.
- In seeking advice from others, offer information -- just the facts without
your opinion -- so that you don’t inadvertently anchor them with your thoughts. Then you can benefit from hearing diverse views on the situation without their views being colored or anchored by yours.
- Whoever most vividly characterizes the situation usually anchors the other’s perception of it. That’s an immensely powerful ability. Others literally see and discuss the situation while anchored from that most memorably stated perspective. The vivid communicator has literally created the playing field on which the game will be played on. Be especially wary of anchors in negotiations. Think through your position before any negotiation begins in order to avoid being anchored by someone else’s proprosal or position.
- My favorite is co-authored by one of three favorite mentors, Howard Raiffa, the remarkably practical guru of negotiating, despite his lofty position as the Frank Plumpton Ramsey Professor Emeritus of Managerial Economics at the Harvard Business School. He and co-authors John S. Hammond and Ralph L. Keeney wrote Smart Choices: A Practical Guide to Making Better Decisions.
- Two other landmark books on the topic are J. Edward Russo, Paul J. H. Schoemaker,
- and Edward J. Russo’s Decision Traps: Ten Barriers to Brilliant Decision Making and How to Overcome Them [Don’t you just love such gradiose titles?] and Max H. Bazerman’s Judgment in Managerial Decision Making.
We use unconscious routines, called heuristics, to cope with the complexity inherent in decision making. They serve us well in most situations. For example, in judging distances, we equate clarity with proximity. The clearer an object appears, the closer we judge it to be. The fuzzier, the farther we think it is. Like most heuristics, it is not foolproof. On days that are hazier than that to which we are accustomed, our eyes will tend to trick our minds into thinking that things are more distant than they actually are. For airplane pilots this distortion could be catastrophic if they weren’t trained to use other truly objective measures and instruments. While this decisionmaking flaw is based on sensory perception others are based on biases, still others on irrational anomalies in our thinking. They are potentially dangerous because they are invisible to us. They are hardwired into our thinking so we fail to even recognize that we are using them. Anchoring
How would you answer these two questions?
1. Is the population of Turkey greater than 35 million?
2. What’s your best estimate of Turkey’s population? If you are like most people, the figure of 35 million (researchers chose arbitrarily) influenced your answer to the second question. I’ve watched the behavioral scientists ask variations of these questions to groups of people many times over the past decade. In half the cases, 35 million was used in the first question, in the other half, 100 million. Without fail, the answers to the second question increase by millions when the larger figure is used (as an anchor) in the first question. When considering a decision, the mind gives disproportionate weight to the first information it receives. Initial impressions, estimates or other data anchor subsequent thoughts and judgements. The implications to influence another’s perceptions are mind-boggling and can take many guises. A colleague can offer a comment or a statistic can appear in the morning paper which will influence your subsequent decisionmaking on that topic. Other guises can be as insidious as a stereotype about a person’s skin color, clothing or accent. In business, one of the most frequent "anchors" is a past event or trend. A marketer, in attempting to project sales of a product for the coming year, often begins by looking at the sales volumes for past years. This approach tends to put too much weight on past history and not enough weight on other factors. Because anchors can establish the terms on which a decision will be made, they can be used as a bargaining tactic by savvy negotiators.
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Reduce the impact of the effects of anchoring in these ways:
Status-Quo Trap
We instinctively stay with what seems familiar. Thus we look for decisions that involve the least change. For example, when radically new prducts are introduced, they are made to look like an existing and familiar product. The first cars looked like horseless carriages. The first online newspapers and magazines had formats much like their print counterparts. To protect our egos from damage, we avoid acting to change the status quo, even in the face of early warnings that demonstrate that change will be safer. We look for reasons to do nothing. For example, in one experiment, a group of people were randomly given one of two gifts of approximately the same value - half received a mug, the other half got a large, Swiss chocolate bar. They were told that they could easily exchange the gift they received for the other gift. While you might expect that about half would have wanted to make the exchange, only one in ten actually did. The power of status quo kicked in within minutes of receiving an object. Other experiments have shown that the more choices you are given, the more pull the status quo has. Why? Because more choices involve more affort while selecting the status quo avoids that effort. In business, the sins of commission (doing something) tend to be punished much more severely than sins of omission (doing nothing). In all parts of life, people want to avoid rocking the boat. What can you do? Think of your goals first, when preparing to make a decision, then review how they are served by the status quo as compared by a change. Look at each possible change, one at a time, so you don’t overwhelm yourself and then instinctively want to "stay safe" and unchanged. Never think of the status quo as your only alternative. Ask yourself whether you would choose the status quo, if, in fact, it weren’t the status quo. Avoid the natural tendancy of exaggerating the effort or cost or emotional reaction of others or for yourself if you change from the status quo. Remember that the desirability of the status quo may change over time. When considering a change, look at possible future situations. If you have several alternatives that are superior to the status quo, avoid the natural tendancy to fall back upon the status quo because you are having a hard time choosing between the other alternatives. The Justify- Past-Actions Trap
The more actions 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. Whenever you invest time, money, or other resources, or whenever your personal reputation is at stake, you will find it more difficult to change your decision or course of action. Suppose you pour a great deal of time and effort into offering a product to a new niche market. Because you have already used resources to be successful in that market, you will find it difficult to withdraw, even when the market clearly is not interested in your product. If you have a once-close childhood friend who has not been supportive of you for years, you’ll be reluctant to acknowledge that change and will likely act as if you are still close. Banks used to continue to lend to businesses that had fallen back on payments, thus throwing good money after bad. For all decisions with a history, make a conscious effort to set aside your "past actions" - investments of emotion, money or other resources - as you consider whether to change direction. Seek out and listen to people who were uninvolved with the earlier decisions. Examine why admitting an earlier mistake distresses you. If the problem lies in your wounded ego, deal with it straight-away. As Warren Buffet once said, "When you find yourself in a hole, the best thing you can do is stop digging." Don’t cultivate a failure-fearing culture in the people around you at home or at work. In such an atmosphere, others will perpetuate mistakes rather than admitting them to you and changing course. When you set an example of admitting mistakes in your choices and self-correcting, others will believe they can do likewise without penalties from you. Although we hope to learn from every mistake, we can’t help but long for a faster learning curve so we might continue in a wiser, smoother path through the process of making decisions. I hope your awareness of these traps can help you avoid them in your future decision-making.
If you’d like to learn more, I recommend three well-written books:
© by Kare Anderson. All rights reserved. Kare Anderson is a behavioral futurist who speaks and writes about "Say It Better" methods of thoughtful communication, conflict resolution, cross-promotion and outreach, and multisensory techniques to create more memorable on-site experiences. An Emmy-winning former TV commentator, Wall Street Journal reporter, she’s a national columnist in 98 monthly magazines (from Gourmet Retailer to Broadcast Engineering), nine-time author ( Getting What You Want, Pocket Cross-Promotions, Make Yourself Memorable, Beauty Inside Out, Cutting Deals With Unlikely Allies, Resolving Conflict Sooner...) and publisher of the "Say It Better" online newsletter now read by over 17,000 people in 32 countries. Anderson is also the co-founder of The Compelling Communications Group The Compelling Communications Group
Website: www.sayitbetter.com
