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6 Reasons We Make Bad Decisions, and What to Do About Them

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https://hbr.org/2019/08/6-reasons-we-make-bad-decisions-and-what-to-do-about-them

hbr.org

6 Reasons We Make Bad Decisions, and What to Do About Them
Executive Summary Consistently making good decisions is arguably the most important habit we can develop, especially at work. But some things are detrimental to good decision-making. When you have to make an important decision, be on the lookout for decision fatigue. Our ability to perform mental tasks and make decisions wears thin when it's repeatedly exerted.

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2,000 decisions per waking hour

Research has shown that the typical person makes about 2,000 decisions every waking hour. Most are minor ones and we make them automatically. But many have serious consequences.

That's why...

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Decision fatigue

Our ability to perform mental tasks and make decisions wears thin when it’s repeatedly used.

Identify the most important decisions you need to make, and, as often as possible, prioriti...

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A steady state of distraction

Our brains process five times as much information today as in 1986. Thus, many of us live in a continuous state of distraction and struggle to focus. 

To counter this, find time e...

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Lack of input

Introverts are usually reluctant to speak up in a meeting until they know precisely what they want to say. But they may have some of the best ideas to contribute.

So when scheduling a ...

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Multi-tasking

Performance, including decision-making effectiveness, suffers by up to 40% when we focus on two cognitive tasks at the same time. 

When you need to make important decisions, commi...

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Emotions

Our emotions, especially during moments of peak anger and happiness, can hinder our ability to make good decisions.

Pay attention to your emotional state and focus on the character str...

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Analysis Paralysis

The more information we have to consider, the longer we typically take to make a decision. 

While the decision-making process should be thorough, the best way to make good decisio...

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SIMILAR ARTICLES & IDEAS:

Turn Small Decisions Into Routines

Decision-making works like a muscle: as you use it over the course of the day, it gets too exhausted to function effectively.

One way to avoid this is to eliminate smaller decisions by t...

Make Big Decisions In The Morning

Save small decisions for after work (when decision fatigue kicks in) and to tackle complex decisions in the morning, when your mind is fresh

A similar strategy is to do some of the smaller things the night before to get a head start on the next day.

Pay Attention To Your Emotions

...and you'll able to look at decisions as objectively and rationally as possible.

Strong decision-makers know that a bad mood can make them lash out or stray from their moral compass just as easily as a good mood can make them overconfident and impulsive.

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Milton Friedman

"The best measure of quality thinking is your ability to accurately predict the consequences of your ideas a..."

Milton Friedman

Think in Years, Not Days

Before jumping to a conclusion, think about the long-term consequences of your decision.

We may respect those able to fling themselves into a hard problem and make a quick choice with seemingly little thought, but making a meaningful decision needs to be done with care for the long-term effects.

Understand Decision Fatigue

It’s important to be aware of what state of mind you’re in before tackling a hard choice.

Decision fatigue happens when the mental energy required to weigh the tradeoffs of our decision becomes too much for us to handle. 

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Decision-making obstacles

Decision-making obstacles
Psychological reasons why we find decision-making difficult right now:
  • The realness of the present threat: the new virus is really contagious and people are dying from ...

The pandemic and our biases

The threat, uncertainty, and anxiety related to the pandemic lead us to make short-sighted decisions:

  • we crave more information so we are spending a lot of time looking for news updates relating to the virus and its spread. But too much negative news causes stress and distraction.
  • the lack of agency causes people to seek out actions that will make them feel more in control. Early on, this took the form of buying hand sanitizer and rubbing alcohol.

Financial decisions

People want to take action quickly, even when inaction might be more prudent.
Faced with anxiety, some are making quick decisions about finances as well and started fear selling their stocks. But this is taking a paper loss in the present that is likely to come back in the future (given the way stock markets have acted in the past).

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Default choices

Default choices

90% of your daily decisions happen automatically, many shaped by your environment. Thus, most decisions are a habit, not a deliberate choice.

To make smarter choices, design smarter...

Designing your life

Design your life like a choice architect:

  • Encourage smarter decisions you want to do by making them more accessible.
  • Add friction to habits you want to quit, making them less accessible, or remove the option to perform them completely.

Richard Thaler

Richard Thaler

“First, never underestimate the power of inertia. Second, that power can be harnessed.” 

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Work on the right decision

The way you frame your decision at the outset can make all the difference. 

State your decision problems carefully, acknowledge their complexity and avoid unwarranted assumptions ...

Specify your objectives

A decision is a means to an endAsk yourself what you most want to accomplish and which of your interests, values, concerns, fears, and aspirations are most relevant to achieving your goal.

Decisions with multiple objectives cannot be resolved by focusing on any one objective.

Create imaginative alternatives

Your decision can be no better than your best alternative.

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Making Decisions

People usually make impulsive decisions and take shortcuts while stressed out. A 16th-century Catholic mystic, Ignatius, provides us with some methods of discernment and decision-making, which are ...

Self-distancing

The act of increasing the psychological distance from your own subjective perspective when assessing events that you experience.

Is an external perspective that you can use when th...

Benefits of self-distancing

  • It can help people cope with difficult events from their past.
  • It can  help people deal with socially distressful situations.
  • Useful because of our tendency to display high levels of wise reasoning when we give advice to others, but not when we decide how to act for ourselves.
  • It reduces decisional biases and improves decision-making during times of information overload.

How to create self-distance

  • Use self-distancing language:  refer to yourself in the second or third-person.
  • Try to view the situation from an alternative viewpoint, that is different from your own.
  • Try to visualize the perspective of  someone you admire, and then ask yourself what would they do in that situation.
  • Try expressive writing: write about your thoughts and feelings when you’re trying to analyze an event that you’ve experienced.

Make Better Choices

  • Seek good information. Be skeptic and never just assume that what you’re being told is always true.
  • Avoid common pitfalls, like making decisions without enough time or in...

Anchoring Bias

A common occurrence of heuristics in which we use an initial starting point as an anchor that is then adjusted to yield a final estimate or value.

Example: estimating the value of an o...

Being Too Optimistic

People who are told that the risk of something bad happening is lower than they expected, tend to adjust their predictions to match the new information. But they ignore the new information when the risk is higher.

Part of this overly optimistic outlook stems from our natural tendency to believe that bad things happen to other people, but not to us. 

You Often Make Poor Comparisons

Sometimes we make poor comparisons or the compared items are not representative or equal.

We often decide based on rapid comparisons without really thinking about our options. In order to avoid bad decisions, relying on logic and thoughtful examination of the options can sometimes be more important than relying on your immediate "gut reaction."

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Noise

Organizational noise comes in endless streams of information and communication. At the individual level, there is internal noise, which manifests from our biases, fears, and competing priorities...

Fear

Fear of failure, fear of making the wrong decision, and fear of our own inadequacy all affect the actions we take and quality of the decisions we make.

If you frequently question your ability to make sound decisions seek out a coach or mentor who can help you boost your confidence.

Attention

Multitasking slows us down as the brain is optimized to focus on one task at a time. Spreading our attention across multiple tasks becomes draining and leaves little energy for those tasks that matter most.

Pay attention to what you're doing. Turn off any distractions that may take your mind elsewhere.

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