The article states that the fault in not in a decision-making process, but in the mind of the decision maker, since a lot of psychological factors are involved. Heuristics, unconscious routines, which are used to handle complex situation play an important role in a decision-making process. There are lot of flaws, which are namely because of the biased thinking, which impacts actions not only of a manger of a big firm but also a normal person on a daily basis. List of Psychological Traps:
1) Anchoring Trap: Weightage given to the first information a mind receives.
2) Status-Quo Trap: Resorting to comfortable options instead of working towards the right option, which requires a lot of work.
3) Sunk-cost Trap: A trap that justifies past choices, more of an investment that is irreplaceable.
4) Confirming-evidence Trap: Giving weightage to supporting information and too little importance to a conflicting information at hand.
5) Framing Trap: The initial and the most important step of framing the problem the way it is required before taking a decision.
6) Estimating and Forecasting Trap: Mind is calibrated after working on a monotonous task, that when something uncertain is not anticipated.
Article – Leaders as Decision Architects
In order to avoid preventable mistakes, an approach always comes handy, containing the following five steps:
1) Understanding the errors that can occur in a decision-making process beforehand.
2) Determining if there is any behavioral issue, which leads to a trap.
3) Specifying the underlying causes for the fault in the process.
4) Redefining the approach to decision-making so that we don’t fall for trap and motivation remains intact.
5) Keep on testing the solution until you feel content.
There are few common biases that affect business decisions namely:
1) Action-oriented biases: pertaining to overconfidence and over optimistic approach.
2) Related to perceiving and judging alternatives: a decision we have known initially or some decision that is already in favor.
3) Framing of alternatives: looking more into the past actions example sunk cost trap
4) Stability: favoring short term gains instead of long term gains.