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4 Common Decision-Making Mistakes That Are Holding You Back
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Decision-making errors
Most decision-making errors boil down to:
- logical fallacies (over-generalizations, comparing apples and oranges, circular thinking)
- limiting beliefs (underestimations of what's possible)
- judgment biases (valuing certain factors above others).
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Confirmation Bias
If you already have an opinion about something before you've even tried to figure it out, chances are you'll over-value information that confirms that opinion.
Think about what kinds of information you would expect to find to support alternative outcomes.
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Attribution Bias
The “fundamental attribution error,” is when we excuse our own mistakes but blame other people for theirs.
Give other people the chance to explain themselves before judging their behavior.
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Anchoring Bias
When we’re evaluating an option, we often fixate on the first piece of information we have about it.
Decide in advance what outcome you have in mind.
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The Sunk Cost Fallacy
“Sunk costs” are money, time, or effort we’ve already spent and can’t get back.
Cultivate a habit of admitting your mistakes. Ask yourself: If the past didn’t exist and you’re just starting out now, what would you do?”
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Why decision-making blunders are made
Each day, we automatically make thousands of choices, from what time to wake up to what to eat.
The problem with this automatic processing is that there are instances when we jump to concl...
6 of the largest decision-making blunders
Sunk-cost fallacy. Present yourself with the new options at hand -- without considering the sunk cost.
Narrow framing. When we're in situations that will repeat themselves over time, we should take a step back and play a game of averages.
Emotionally driven decisions. Hold off on making important decisions when you are in a bad mood.
Confirmation bias. Always look for conflicting evidence and then make judgments based on more well-rounded information.
Ego depletion. When we're drained, physically or mentally, we're less likely to think critically.
The halo effect says that once we like somebody, we're more likely to look for his or her positive characteristics and avoid the negative ones. Realize your biases toward certain people and do what you can to eliminate them.
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Confirmation bias
People don't like to rethink their beliefs once they are formed.
We would rather ignore information that would challenge our ideas than engage with threatening new information. This is ...
Availability heuristic
Our brain likes to take shortcuts to solve a problem when normal methods are too slow to find a solution.
The problem with this approach is that frightening events are easier to recall than every-day events. We should be aware that alarmist news broadcasts don't help in an accurate sense of events.
Anchoring
We have a tendency to stubbornly hold on to a number once we hear it and gauge all other numbers based on the initial number, even if the information is not that relevant.
For example, if customers are limited to 'four per customer' they are more likely to buy four, even if they did not initially intend to do so.
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Information that matches our beliefs
We surround ourselves with it: We tend to like people who think like us; if we agree with someone's beliefs, we're more likely to be friends with them.
This makes sense, but it means ...
The "swimmer's body illusion"
It's a thinking mistake and it occurs when we confuse selection factors with results.
Professional swimmers don't have perfect bodies because they train extensively. Rather, they are good swimmers because of their physiques.
The sunk cost fallacy
It plays on this tendency of ours to emphasize loss over gain.
The term sunk cost refers to any cost that has been paid already and cannot be recovered. The reason we can't ignore the cost, even though it's already been paid, is that we're wired to feel loss far more strongly than gain.