Before making an important decision, prudent managers evaluate the situations confronting them — and often fall into one of the eight traps of faulty thinking.
Some managers are too optimistic and overconfident: They overestimate success and underestimate the range of potential outcomes. On the flipside, other managers are cautious to a fault: They take costly steps to defend against unlikely outcomes.
These are just two of the well-documented psychological traps that ensnare most managers at some point in their careers. Other pitfalls that distort our reasoning abilities and cater to our biases are identified:
• We have a tendency to stick with the status quo.
• We only look for evidence that confirms our preferences.
• We are likely to throw good money after bad to defend our position and avoid admitting a mistake.
The way a problem is framed can influence how you develop solutions. To avoid this trap, you need to reframe the question in various ways to see how your thinking may change based on each version.
We can’t always avoid the distortions ingrained in the way our minds work, but we can build in tests to make our decision-making processes more reliable, thus improving the quality of the choices we make.
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There are two versions of this article: 2000 words and 1000 words (approximate word counts). The full article covers the following sub-topics:
The Brain Science of Decisions
The 8 Traps:
The Anchoring Trap
The Status-Quo Trap
The Sunk-Cost Trap
The Confirming-Evidence Trap
The Framing Trap
The Estimating and Forecasting Traps:
The Overconfidence Trap
The Prudence Trap
The “Recallability” Trap
There Are No “No-Brainers”
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