7 Situations Where a Decision-Making Mistake is More Likely
Tags: Knowledge, Personal Development, Decision Making, Decisions, Heuristics And Biases

Photo by krakenimages on Unsplash

How to Make Better Decisions — Part 2

In article 1, we looked at why we need skills to reduce biases and assumptions, and skills to improve rational thinking to make better decisions.

But, as Daniel Kahneman tells us in ‘ Thinking Fast and Slow ‘, even with those skills, we are still likely to make mistakes unless we learn to recognise the situations where mistakes are more likely.

This article then looks at 7 common situations where it is easy to make bad decisions.

Situation 1 — When you are making decisions!

Unfortunately, we tend to overestimate our abilities in most things, and decision-making is no exception.

Believing we are in control or can control the outcome is often the cause of this overconfidence bias, as is just generally thinking we are smarter than we actually are!

This overconfidence leads us to believe we instinctively know what to do, tricking us into not questioning our logic more.

What to do -

A basic way to lessen our instinctive overconfidence is to get into the habit of thinking about three possible outcomes.

Say you’re deciding how long something will take you. By using a worst-case (high), a best-case (low) and a mid-case, the inclusion of the third and mid-case option will likely bring you closer to a more realistic answer.

Whilst this isn’t a foolproof way to become more realistic concerning your abilities, it is a proven way to give yourself a nudge in the right direction.

Situation 2 — When your ego is in the way

There is a good reason for the proverb ‘Pride goes before a fall’.

Just as we are prone to overestimate our decision-making abilities, so are we also prone to make decisions with our egos, and this very rarely leads to a good outcome.

This is because ego-based decisions are typically all about us. When we make decisions with our egos, we are often trying to save face, show off, or get what we want at the expense of others.

What to do:

Ego problems can come from thinking too much of ourselves, but also from not thinking enough. This is because the ego has a lot to do with our feelings of safety and security.

So when we get too full of ourselves, we think we know better than everyone else. And when we don’t think enough of ourselves, we think everyone knows better than us.

A balance is required. This means:

Thinking about others and how our decisions are going to affect them Valuing ourselves enough that we do not always need the approval or acceptance of others

A good way to do both is to learn humility.

“Humility is not thinking less of yourself, it’s thinking of yourself less.” ~Rick Warren

Situation 3 — When you lack knowledge

This might seem so obvious it’s hardly worth writing, but if you consider it for a second; do you do some basic research before committing to a purchase or decision?

If not, why? How much do you really know about the housing market, or the stock market, or the car you’re about to buy anyway?

When you don’t know much about the subject but are making a decision on it anyway, you are making an uninformed decision and are relying on experience and gut feel. Whilst this may be appropriate for low risk (reversible and low consequence) decisions, it is not for anything else, yet a lot of people will make a decision based on nothing more than the colour they like!

This is also true when you are only exposed to one side of an argument or one source of information, which can be as bad as not having any knolwedge at all. You are making an uninformed decision.

What to do:

Whilst the term is often associated with the medical profession, the concept of ‘making an informed choice’ is essentially about having a basic understanding of the situation and your options.

Learn to make informed decisions by doing some basic research, or speak to experts and ask for advice. Even a basic understanding of a subject will significantly improve your decision-making skills.

And you must consider alternative views to the ones you hold by making sure your research doesn’t just support what you want to find. This is called confirmation bias, and a way to avoid it is by seeking out alternative views.

Situation 4 — When you are trying to avoid conflict

Conflict can be uncomfortable. For many, it can even bring on anxiety and a real sense of fear. For these reasons, we often avoid conflict and maintain the status quo. But this can lead to poor decision-making, never getting to the best solution or just giving in to what others think and want.

Unresolved conflicts tend not to go away either. Instead, they fester, leaving you unhappy and resentful.

We often avoid conflict because we do not know how to deal with it effectively, and also because we always associate it negatively.

But conflict doesn’t have to be negative. It can be really healthy to discuss differences of opinion and resolve conflicts.

What to do:

Practice becoming more assertive. Being assertive means “ being forthright about your wants and needs, while still considering the rights, needs and wants of others “

Develop a process to deal with conflict and address the issue early before it festers.

Situation 5 — When you are emotional

Ever said something to someone in the heat of the moment that you later regretted, or sent an email or text message when you were angry? What about made an impulse buy due to jealously?

Your decisions here were emotional reactions to things you didn’t like, but instead of improving the situation, you’ve likely made it worse.

We can also become so emotionally attached to an outcome that we want that we fail to see when it’s no longer worth the investment. This is the equivalent to the poker player who continues to throw good money into the pot when he has no hope of winning.

Emotions can be strong drivers in our decision-making process. And whilst we need emotions to make decisions, becoming overly emotional does not always help us to make good decisions.

What to do:

Becoming more aware of our emotional state is a good start. If we can recognise this in ourselves before we have committed to a decision, we stand a better chance of regulating the emotion we are feeling and thinking about the decision rationally.

Taking a few deep breaths or going for a walk to calm down or relax can help to put this into perspective. As can speaking to a trusted friend and telling them how you feel.

It could be that after doing this the emotion you were feeling was leading you to the right decision, but it could also mean clearing your desk after your boss reads your email…

Situation 6 — When time is a factor

When we have too little time, we can rush to a decision without thinking things through properly. And when we have too much time we either delay deciding until we’re back to having too little time or we continue to gather more and more information until we’re so overwhelmed that we cannot think straight.

What to do:

The first thing to do is establish if the time pressure is real or imaginary. Ask yourself if you really need to make the decision right now. Often we have more time than we think, even in a crisis.

If it is urgent, having a go-to decision-making process can help us quickly cycle through the situation and options. And as we discussed in point one, use a range of outcomes to help improve the accuracy of your estimates.

Getting some fresh air or going for a quick walk can also help, buying us some valuable minutes to clear our heads and think through the decision.

Taking a few deep breaths, meditating and praying can have the same effect.

If you have longer to decide, use the time to gather some information, but be aware that too much information can also trip us up as we can become overloaded and lose sight of the important parts.

To avoid this decision paralysis, set a deadline anyway. Use the time to gather enough relevant information to make an informed decision then go with it. There will always be more information so at some point you just need to go with what you have, and if all your options seem bad, go with the “ least worst “ decision you can make.

Situation 7 — When you are in a crowd

We’ve all been caught up in the heat of the moment and agreed to something we’ve later regretted. It’s common when we’re in a group.

The reason for this could be something that’s called ‘groupthink’. This is when nobody wants to be the one to disagree. Either because they believe that the group knows best, or because they don’t want to be the only one to disagree.

Many bad decisions are made when people don’t speak up.

What to do:

Avoiding groupthink has a lot to do with how the group leader behaves. This doesn’t just mean when the group has a formal leader. It can be strong personalities within your own group that are leading it too.

If you are the leader or are confident enough to speak up, encourage everyone to contribute. And if you haven’t spoken up because you are assuming the group knows best, test that theory out by doing some basic research or asking someone outside the group for their opinion.