about lucky breaks and chalk up their right calls to superior judgment, whereas losers tend to emphasize the role of bad luck -- rather than bad judgment -- when their predictions go wrong.”
That’s what Cornell University psychologist, Thomas Gilovich, discovered from his experiment with NCAA fans. See more in this article by Shankar Vedantam of the Washington Post.
Learn how you can become more lucky by making smarter choices. Read a favorite book of mine, co-authored by one of my mentors, Howard Raiffa.
Most of us fool ourselves sometimes when making decisions. Here are some of the most common ways and what you can do to make smarter choices.
Think back on a crucial decision you’ve made in your work or with a loved one that haunts you still. Now, consider some smaller decisions where you realize in retrospect that, if you’d made another choice, you’d have saved a situation, time, “face”, a relationship, money or another resource, or simply 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 unconscious making traps we all fall into when trying to figure out what we should do.
According to renowned negotiation and games theory expert, 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.
Raiffa has found that the fault often lies not in the decision-making process but rather in the mind of the decision maker. The way the human brain works can sabotage our decisions.
Here are some insights into the most well-documented traps we set for ourselves in making decisions. Perhaps they can help you make better decisions in the future.
How We Often Distort Our 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 decision-making 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 we are using them.
Here are some of the most common decision-making traps
- and what you can do to overcome 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. When 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). 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 judgments. 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 newspaper that will influence your subsequent decision making on that topic.
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 to influence how someone feels about a political issue or as a bargaining tactic by savvy negotiators.
Reduce the impact of the effects of anchoring in these ways:
1. 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.
2. 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.
3. 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 most vivid communicator in the situation often has the most power as she can literally created the playing field on which the game will be played.
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 proposal or position.
The 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 products 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 effort while selecting the status quo avoids the stress of making a choice
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 as to not 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 tendency 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 tendency 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 taken on behalf of a friendship, choice or belief, the more difficult you find it to change direction or acknowledge that you now feel differently. Whenever you invest time, money, or other resources, or your personal reputation is at stake, you will find it more difficult to change your decision or course of action.
Suppose, after walking around a store, a low-key clerk asks you to describe your favorite feature of the store. You answer. She asks you to elaborate or show her. Each time you move, speak and demonstrate what you mean, you deepen your belief, get more articulate about it and are more likely to tell others your view after you leave the store.
Suppose you pour a great deal of time and effort into an issue.
Because you have already used resources to prepare to put the process in place, you will find it difficult to withdraw, even when others are not enthusiastic about your idea. If you have a once-close childhood friend who has not been supportive to you for years, you’ll be reluctant to acknowledge that change and are likely to 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 to an earlier mistake distresses you. If the problem lies in your wounded ego, deal with it straightaway. As the well-known investor, 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 so that others perpetuate mistakes rather than admitting them to you and changing course. Set an example of admitting mistakes in your choices and self-correcting so that others believe they can do likewise without penalties from you.
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