6 common decision-making traps and tips to avoid them

Decision traps are so hard-wired into our thinking process that we often fail to recognize them even when we are falling right into them. We cannot always eliminate them, but we can learn to anticipate them and mitigate their effects.

Drawing on the most recent research in neuroscience, decision theory and behavioral economics, Decision Mojo helps us recognize decision traps and lessen their impact, and also teaches techniques and strategies for making better individual decisions and leading more effective team decision-making.

Below are 6 of 12 key decision traps from Decision Mojo that could be impacting the decisions you or your team are making.

Information Overdose Trap

• The Information Overdose trap occurs when we overdose or fail to set limits on information gathering, which can make it difficult to process or distinguish between what’s relevant and what’s extraneous.  It also can result in time and resources being wasted pursuing more and more information instead of making a decision.
• TIP -  At the beginning of a decision process, assess the relative importance of the decision being made and proactively set a time limit (time box) for the amount of time you are going to spend on information-gathering.
• TIP - Use a strategy taught by the Marines. “Gather enough information to give you 70% confidence, then make the decision. The time it takes to get to 100% confidence won’t incrementally improve the decision and may well get you killed.”

Anchoring Trap

• Anchoring can occur when an individual or group latches onto the first information they encounter about a decision.
• A leader of a group may unintentionally anchor a group’s thinking by presenting their opinion or analysis first in a decision-making process.
• Price negotiations are always affected by the first number mentioned
• The Anchoring Trap can cause alternatives to be clustered around the “anchor,” throwing off estimates, forecasts, and consideration of wider-ranging alternatives.
• TIP - Ask the people involved to think about the issue individually before inviting discussion as a group to avoid anchoring on the first idea presented.

Status Quo Trap

• This is the tendency to maintain things as they are, even when that may be significantly less than optimal.
• It’s dangerous in cultures/organizations where sins of commission are punished more than sins of omission.
• When there is an overwhelming number of choices, the status quo bias is stronger.
• It can result in opportunities not acted upon and lead to the triumph of the “good enough.”
• TIP - To help avoid the Status Quo trap, evaluate the status quo alongside the new options being considered as if it were not the "default option."

Loss Aversion/Sunk Cost Trap

• This trap comes from our innate tendency when faced with loss to have strong emotions, which outweigh the positive emotions associated with gain.
• It often occurs when a change of direction is being considered from previous investments in time, money and resources.
• It leads us to place undue importance on potential losses.
• We may not pursue a large gain if a small loss could be likely.
• We might stick with unsuccessful projects or hires long beyond their point of value.

Overconfidence Trap

• It’s easy to fall into the trap of being overconfident in our personal judgments or too optimistic about capabilities or outcomes.
• This trap can lead to falling short of projections, missing deadlines, and over-running budgets by overestimating performance and underestimating risk.

Confirming Evidence Trap

• This trap comes from our tendency to give too much weight to evidence that supports a view we already have and not enough weight to contradictory evidence.
• It can distort how we collect and interpret data, and lead us to neglect important evidence.

Could you be falling into one of these traps and not even know it?

Participate in our complimentary Decision Diagnostic, which will evaluate a specific decision against these 6 common traps and provide you with more tips on how to overcome them. Enter a decision you need to make, answer a few questions, and we'll let you know!