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Patience Investing Inc.
Patience Investing Inc.
Articles (7)  | Author's Website |

Decision Traps - Learn to Avoid These

June 15, 2012

The decision research of the last two decades has shown that people in numerous fields tend to make the same kinds of decision-making mistakes over and over, what Russo and Schoemaker have termed as “decision traps” in their book, "Decision Traps: The Ten Barriers to Brilliant Decision Making and How to Overcome Them."

The summary of the ten most dangerous decision traps are excerpted from their text:

  1. Plunging In – jumping to the conclusion without first taking a few minutes to think about the crux of the issue you are facing.
  2. Frame Blindness – setting out to solve the wrong problem because you have created a mental framework for your decision, with little thought, that causes you to overlook the best options or lose sight of important objectives.
  3. Lack of Frame Control – failing to consciously define the problem in more ways than one or being unduly influenced by the frames of others.
  4. Overconfidence in Your Judgment – failing to collect key factual information because you are too sure of your assumptions and opinions.
  5. Shortsighted Shortcuts – relying inappropriately on “rules of thumb” such as implicitly trusting the most readily available information or anchoring too much on convenient facts.
  6. Shooting from the Hips – believing you can keep straight in your head all the information you’ve discovered, and therefore “winging it” rather than following a systematic procedure when making the final choice.
  7. Group Failure – assuming that with many smart people involved, good choices will follow automatically, and therefore failing to manage the group decision-making process.
  8. Fooling Yourself about Feedback – failing to interpret about the evidence from past outcomes for what it really says, either because you are protecting your ego or because you are tricked by hindsight.
  9. Not Keeping Track – failing to keep systematic records to track the results of your decisions and failing to analyze these results in ways that reveal their key lessons.
  10. Failure to Audit Your Decision Process – failing to create an organized approach to understanding your own decision-making, so remain constantly exposed to all the above mistakes.
Russo and Schoemaker mentioned that you don’t need to be concerned about these decision traps when you are dealing with simple decision-making as opposed to big, complex decision-making.

They not only listed the traps to avoid but also teach you the process of decision-making. If you internalize a good decision-making process, you can rise above stress and confusion.

About the author:

Patience Investing Inc.
PhD' Finance candidate at the University of New Brunswick, Fredericton

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