How to Make Better Decisions: 3 Big Pitfalls to Avoid

How did I get this wrong? I checked all the facts and figures that were available. I even took time to consult with two of my colleagues. I made an objective decision…or did I?

Has this ever happened to you?

Because you’re human, I’m sure it has.

Let’s rewind…

After reviewing all the relevant information available to you, you decided to meet with a few trusted colleagues before making your final decision. As you trust both of them, you knew they’d give you an honest opinion – even after hearing which way your were leaning.

You liked the opinion presented by colleague A. Therefore, you took her input on board. Although you valued colleague B’s opinion, you ignored what he said as it wasn’t aligned with yours.

Did you really make the best, most objective decision you could have? If you’d taken B’s opinion more seriously, might you have made a better decision?

Decision-making scenarios like this are quite common. It’s a classic example of your brain making a thinking error for an illogical, but human reason.

Here are 3 common thinking mistakes and 3 pitfalls to avoid for better decisions:

3 ILLOGICAL PATTERNS

The above scenario is known as confirmation bias –  a common but flawed pattern in how you think (Pitfall 1). Incidentally, this thinking pattern applies to everyone - no matter how well-educated or intelligent you are!

It’s natural to surround yourself with information that matches your worldview. “Evidence selected by and for you”. If you didn’t, you wouldn’t be be human. In fact, your brain seeks out information that confirms your beliefs. This is the confirmation bias at work.

Pitfall 2 –

When I was growing up there was a popular board game called “Chutes & Ladders”. The objective of the game was to reach square 100. In order to make it to the end you had to avoid the “Chutes” or pitfalls that could send you back to the beginning.

However, the “Ladders” could help you jump ahead toward the winning square.

Has this next scenario ever happened to you?

You’ve been watching an item on eBay for a few days. At this point you’ve invested a good 3-4 hours in this auction so far. And now, the real bidding has started…

In the final minutes leading up to the final bid, the price has increased far beyond what you were willing to pay a few days ago. But, you’ve invested way too much time and energy to turn back now.

3…2…1…You got it! You’ve won…or have you?

You’ve paid much more than you wanted to, and possibly more than the thing is worth brand new.

Don’t worry, you’re not crazy. You simply experienced the very normal sunk cost fallacy. As you had already invested a lot of time and energy ("sunk"), you weren’t about to walk away. Perhaps now it’s totally clear what happened. However, it wasn’t at all clear when your emotions were involved.

Pitfall 3 –

Image you’re planning a day trip to the mountains with your friends and family, including a nice picnic. It has rained the last three weekends so you think it’s safe to plan it for this upcoming weekend. The odds are clearly in your favor…or are they?

If you decide to go and it rains, you would fall victim to the gambler’s fallacy This is the pattern of placing too much weight on past events believing they will have an effect on future outcomes.

You have simply confused memory with reality. The logical truth is that past events make absolutely no difference to odds.

If you’ve experienced one or more of the above scenarios it doesn’t mean you have bad judgment or poor decision-making skills. It simply means that you’re human. We are, after all, illogical creatures.

Understanding how emotions can override logic is the first step in building the “Ladders” to avoid the “Chutes”.

HEAD VS HEART

Generally speaking, there are two main types of decisions:

• Type A: While crossing the street a car comes out of nowhere and is speeding right at you.
• Type B: You’ve been asked to take a 2-year job assignment abroad.

Type A requires a quick decision from the “gut”. Night after night, great athletes excel at this type. See big Dirk below.

However, type B requires a slower more rational approach of the mind. For type B decisions, here are two models which can help.

In the past these two kinds of decision-making were often separated by matters of the heart ("gut instinct") and the head ("rational mind").

However, new science points to the need for both, regardless of the situation or needed decision.

According to neuroscientist Antonia Damasio, “the more you pay attention to the outcome of trusting your intuition in combination with the facts, the better your future decision making can become”.

3 LOGICAL SOLUTIONS

Here are 3 tips to help you avoid these 3 perilous pitfalls:

1. Widen your options 

Remember the sound advice before a complicated medical procedure? The same goes for a big decision: Get at least three opinions.

More options will prevent you from having to choose between option 1 and option 2. Option 2 might be better than option 1 but that doesn’t make it a good option.

2. Get some distance 

Have you ever gotten the advice to “sleep on it” before making an important decision? Well, this was great advice.

Distance will give you some needed perspective and allow you to think about potential consequences of taking an impulsive action. This may or may not affect your final course of action. However, it’s better to wait just in case.

3. Provide for unexpected outcomes 

What could be the worst case if the decision doesn’t work out as planned?

Think about the potential consequences of decisions and plan for how you would handle the worst case scenario or other unexpected results. This my cause you to re-think your decision or at least have a backup strategy in mind if things go awry.

CONCLUSION

First and foremost, be aware of these thinking patterns and why your brain can misfire so badly. Learning about them can be eye-opening and sometimes painfully funny.

And whenever possible, take a step back and look at the big picture. Ask yourself:

Why are my emotions involved here?

What information am I missing?

What would happen if…?

Take the time to examine all the facts available and gather different opinions. This allows you to see the situation objectively. Don’t base a big decision on your gut instinct without exploring all the data first.

Understanding these 3 pitfalls can help you avoid making bad decisions. Practicing these 3 tips will help you make better ones.

Which of these pitfalls have you experienced?

______________________________________________________

"Raising Awareness is the key to peak performance."

Tim Nash helps leaders & their teams raise awareness for peak performance.

For free actionable tips & strategies, join him on The Path To Peak Performance.