Decision Making

Decision-making is a critical life skill. Yet, the vast amount of information flowing to us often causes us to take shortcuts in our information processing.

It is human nature to process information in a way that supports our own beliefs. This is not inherently wrong as it helps us think faster and more efficiently. The downside is, we often speak with confidence about things we don’t fully understand.

Let’s explore some of the cognitive biases to be mindful of in our decision-making.

1. Confirmation Bias – Tendency to favor information that reinforces what we believe. You hear from several people that walking is better than jogging. Therefore, you’ll be more inclined to read articles that confirm this statement rather than articles offering a different opinion.

2. Anchoring Bias – Tendency to be overly influenced by the first piece of information obtained, no matter how reliable it is, and using it as a baseline for comparison. While shopping for a vehicle, the salesperson quotes you a price of $50,000. You return the following week and negotiate a purchase price of $40,000. This seems like a great deal considering the original price quoted. However, if $30,000 is the initial quote, $40,000 wouldn’t look like the best price after all.

3. Bandwagon Effect (“groupthink”) – Tendency for people to adopt a behavior or attitude based on what others believe regardless of the underlying evidence. Voting for the most popular candidate in an election because you want to be part of the majority.

4. Halo Effect – Tendency to be influenced by previous judgments of performance and personality. Assuming a good-looking person is also a good person overall.

5. Availability Bias – Tendency of people relying on information that comes to mind quickly and easily. Fear of a shark attack because you hear a lot about it in the news while you’re more likely to succumb to heart disease than being attacked by a shark.

6. Ostrich Effect – Tendency for people to avoid information they perceive as potentially unpleasant. Instead of dealing with a situation, some people prefer to bury their heads in the sand, like ostriches. Avoiding relevant feedback that could help you get a better understanding of a situation.

7. Recency Effect – Tendency to remember the first and last items in a series while finding it challenging to remember the middle. You’re in a meeting, and the speaker is explaining an important concept. This person speaks relatively fast, and you are unable to capture everything shared. As a result, you notice you only took notes of the first few words and last few words.

8. Choice-Supportive Bias – Tendency to remember our choices as better than they were, as we tend to over-focus on the benefits we chose versus the options we did not choose. Attributing more positive features to a favorite brand in favor of brands we have not experienced.

9. Fundamental Attribution Error – Tendency to assume a person’s actions usually reflect who they are as an individual. Assuming the reason a driver cuts us off is that they are selfish or careless when this individual may be dealing with an emergency.

10. Outcome Bias – Tendency to judge the quality of a decision made primarily based on how things turned out rather than analyzing factors that led to the decision. Making all of your decisions this week based on flipping a coin. If most of the outcomes are positive, you may think this is a great way of making decisions.

11. Illusory Correlation Bias – Tendency to inaccurately link an action to an effect. Believing that wearing a specific jersey will give your favored team a higher chance of winning.

12. Dunning Kruger Effect – Tendency to overestimate our competence in a specific area. You commit to learning a new language and learn the basics fast. Yet, you realize more progress is needed to become fluent. On the other hand, your friend studied the same language, learned a few words, and overestimates their ability to speak the language.

Keeping these biases in mind can considerably improve our ability to think critically.

Source: Adapted from ehl.edu / Graphic: Visual Capitalist

Unintended Consequences

As we advance in life, leadership, and innovation, we encounter unintended consequences.

Consider the advent of social media. It enables us to connect with others at rapid speed, market to larger audiences, and stay abreast of users’ activity.

❌ Unintended Consequences: Increase in mental health issues, less meaningful engagement, and the inability to develop deeper connections.

Similarly, digital technology has made information more accessible.

❌ Unintended Consequences: Rampant misinformation, unequal access, limited governance, and increased cyber attacks.

Now, imagine being a new leader in an organization confronted with a global pandemic. Not only is there pressure to perform in the new role, but there is also pressure to respond to the pandemic’s impact.

What happens if the leader makes hasty decisions without listening to the opinions of experts, exercise good critical judgment, and analyze the long-term impact on the organization?

❌ Unintended Consequences: Loss of top performers, lack of structure, low employee morale, and unhappy clients.

When unintended consequences are favorable to the organization, everyone wins. When the consequences are unfavorable, they can have far-reaching ramifications. As leaders, we have to act prudently.

Decisions

Have you ever become exhausted from watching people and listening to their opinions? That’s where critical thinking comes into play. There is a lot to be learned from others. The key differentiator is making informed decisions. We naturally gravitate to the beliefs that are similar to ours. We will even go out of our way to support these beliefs.

There’s nothing inherently wrong with this. In doing so, there are questions it would be wise to take into consideration.

𝟏. What am I supporting today, to build a better tomorrow?
𝟐. Am I doing what’s right in the grander scheme of things?
𝟑. In what ways does this information create value?
𝟒. Is this helping me make a difference? And, for whom does this make a difference?
𝟓. How does this inspire others to do more?
𝟔. Do I care? In what way?
𝟕. What would the world look like if there were identical representations of me?
𝟖. How would I feel on the receiving end?
𝟗. Am I holding myself up to the same standards that I hold others accountable?
𝟏𝟎. Do I show empathy and compassion for others that are not like me?

When all else fails, ask yourself:

🌟 What skeletons do I have in my closet that would contradict all that I advocate for and preach?