Pitfalls in Decision Making
The road of decision-making is filled with numerous pitfalls and traps. These pitfalls are hard to discern since they are part of our normal decision making process. They include misconceptions in the decisions we make, a bias in favor of one option, falling prey to the status quo, and continuance with sunk decisions. The more complex the decision, the more likely you'll run into these pitfalls.
One of my favorite types of pitfalls is the anchor. Anchors prejudice your decision by introducing an estimate or idea before you have time to analyze the decision. For example, suppose you and I need to negotiate billing rates for my services. If you reviewed my web site, you clearly saw what my billing rates were. This information will force or anchor you to seek rates that are close to what you already know. Anchors influence your decision by leaving an impression. They are hard to avoid. You can reduce the influence of anchors by not exposing yourself to information that influences your decision until you've had time to think on your own.
Sunk decisions are another common pitfall. Here you are trapped into a past decision because you don't want to admit that you were wrong. So you continue to throw more resources into the bad decision. Technology type projects often lend themselves to sunk cost decision making. To avoid sunk decisions, seek out advice from people who are not involved in the project and recognize that failure is a normal part of decision making.
Finally, there is the status quo where you make decisions that tend to not rock the boat. This bias approach to decision making is common in organizations where change is hard to accept. Additionally, if you break away from the status quo, you open yourself up to more responsibility and criticism. Remember that status quo is not your only alternative and status quo rarely remains the same over time. Ask yourself if the status quo weren't around would you still make the same decision in favor of the status quo?
Try to be aware of these pitfalls in making decisions. And remember, the more assumptions you make in your decisions, the more likely you'll be confronted with these pitfalls.
Written by: Matt H. Evans, CPA, CMA, CFM | Email: email@example.com | Phone: 1-877-807-8756