The hidden traps in decision making Reading 21 Block 3 John S. Hammond, keeney R.L. and Howard Raiffa

Introduction Making decisions is an important work from a number of executive Bad decision can ruin your business and career, sometimes it can not be fixed The big question is a bad decision from which it originated? In some cases bad decisions them searchable back from the decision made But sometimes the fault lies not in the decision-making process but rather in the mind of decision-making The purpose of this discussion is to examine a number of psychological trap that influence business decisions That managers seek to carefully and familiarize yourself with the trap. Psychological Traps is a very dangerous trap.

Introduction Executive is someone trying to familiarize themselves with the trap-trap and the trap is useful to improve their decision-making and recommend proposals on subordinates and co-workers In this research there are various forms of entrapment, among others: Anchoring Trap The Status-Quo Trap The Sunk-Cost Trap The Confirming-Evidence Trap The Framing Trap Estimating and Forecasting Traps

Anchoring Trap Trial simply reflect general and mental phenomena of faulty / malicious called anchoring When considering a decision, our mind gives disproportionate weight to early information that we receive. Anchor can be simple and non-destructive looks commentary offered Widely influential and no one can avoid this influence

Anchoring Trap What can you do about it? Managers can reduce its impact with some Think among others Always look at the problem from a different perspective Open-minded. Always be careful to avoid the anchor from the other side. Be careful in negotiating.

The Status-Quo Trap We may believe that decision-making should be rational and objective. The reality is sometimes we get carried away by the bias that will affect the choices we make. Resource status-quo trap lies in our hearts, our desire to protect our ego from interference. Overcoming the status-quo means taking action and when we take action we take responsibility and open ourselves to a criticism and regret. Decision makers show a strong enough bias alternative perpetuate the status-quo.

The Status-Quo Trap What can you do about it? Always remember to aim yourself and testing how others will carry the status-quo. Never thought that the status-quo just as your only alternative. Ask yourself what I would choose the status quo alternative ,if in fact , it weren’t status-quo. Avoid excessive effort or cost that covers the turn of the status-quo. Remember that the status-quo will be changed in a long time. If we have a few alternatives on the status-quo , walking with the status-quo because we take the best alternative,

The Sunk-Cost Trap Make decisions in a way that is adapted to the last option, when the last option does not seem valid. Sunk-cost is irrelevant to rational decision now, it directs us to make decisions that are not suitable.

The Sunk-Cost Trap What can you do about it? Look out and listen carefully the perspective of those who are not involved with the initial results. Thus we know the influence of Sunk-cost bias in the results and recommendations made ​​by subordinates. Reassign responsibilities when necessary. Do not cultivate a culture of fear and failure of a model to capture offenses officer.

The Confirming-Evidence Trap Is a form of bias that have an impact on where we gather evidence and how we interpret the evidence we receive. This leads us to support the information in and out of conflict information

The Confirming-Evidence Trap What can you do about it? Always check to see the location where we test all evidence with equal rigor. Choosing a good person to act as devil advocated, to oppose the decisions you ponder. Honest to yourself about your motives. Seeing other people advice, do not ask any questions that invite confirming evidences.

The Framing Trap Make decisions based on the limitations of queries against a problem. This is very dangerous because the problem can have a significant limitation on the choices made. The Framing Trap can be divided into a number of forms: Frames as gains & loses:-they tend to adopt the frame as it is presented to them rather than restating the problem in their own way. Framing with different reference point:-the same problem can also elicit very different responses when frames use different references points.

The Framing Trap What can you do about it? Don't directly accept initial frame. Attempt to place the problem is neuter, redundant way that combines gain & loses or embraces different references. Ask yourself how your thinking might change if the framing changed . Test how other people have recommended limiting problem when other decisions.

Estimating and Forecasting Traps A trap when we make a measurement or prediction. There are three specific trap cloud our ability to assess probabilities and not affect the way we make decisions: The Overconfidence Trap The Prudence Trap The Recallability Trap

Estimating and Forecasting Traps The Overconfidence Trap:- While most of us are not very good in making estimates, we believe in our accuracy. It can push for an error in judgment and poor decision making The Prudence Trap:- Is a trap for forecasting in the form of over-cautiousness . We tend to adjust our estimates or forecasting “just be on the safe side” The Recallability Trap:- Frequently base our predictions about future events on our memory of past events which leave a strong impression on our memory

Estimating and Forecasting Traps What can you do about it? Taking a multidisciplinary approach to forecasting and probability judgment. Reduce the influence of overconfidence in making an estimation. Carefully examine all your assumption to ensure they’re not unduly influenced by your memory.