Avoid these traps when making decisions
Effective decision making is a core management skill, but one that many Thai executives find challenging to master.
Organisations are little more than the sum of the decisions made by their people. Yet while many of us may believe that decisionmaking is ‘rational’, here are 7 common emotional traps that can result in poorly-conceived decisions…
Do you recognise these decision making traps? Which do you feel are especially relevant in Thailand?
Trap #1: The Bandwagon Effect
This is the idea that it’s okay to follow the herd because so many other people share the same belief. It’s irrational because it places its faith in the safety of numbers, while completely disregarding the facts of a situation.
Trap #2: Risk Aversion
People to have a strong preference for avoiding losses over potential opportunities and gains. This is also a cultural trait as identified by Geert Hofstede – more prevalent in Asian societies. The result is a widespread aversion to make decisions, execute on plans and strategies, and a lack of desire to look out for opportunities
Trap #3: Outcome Bias
This happens when we judge a decision by its outcome rather than the quality of the decision itself and alternative possible outcomes.
The outcome is always ‘the best of all possible worlds’.
Trap #4: Recency Bias
This is when we weigh recent data more than experiences further out… often a consequence of adrenaline addiction!
Trap #5: Anchoring
This is when we rely too heavily on data that is readily-available when making a decision.
Trap #6: Belief in the Law of Small Numbers
This is when we base our conclusions on a slice of data that’s too small. It’s the equivalent of making mountains out of molehills…
Trap #7: Confirmation (and disconfirmation) bias
Confirmation bias happens when data backs up an a priori belief we have. Disconfirmation bias happens when we do not like information that contradicts our beliefs…
How effectively does your company make decisions?
Why not try this quiz from the folks at Bain and Co. to find out!
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