TRAP IN DECISION MAKING

Presenter and Learner: Pon Nguyen

AB

AB

AB

AB

• Mind gives a bit much weight to the first information it receives

Initial impression, data anchor the thoughts

Anchor trap

How to do about it:• View problems from multiple

perspectives

• Develop your own opinion before asking others

• Be open-minded to get consulted

STATUS-QUO TRAP

• Biases influence decision

• The mind desires to protect ego: Breaking the status-quo mean -> taking responsibility -> opening up self to criticism -> opening up self to regret

• Sin of commission ( doing something ) punished more than sins of omission ( doing nothing )

How to do about it Does the status quo

support? Never think it is only the

alternative Avoid overestimating

changing costs “The world is changing

in every seconds. If you do not change, it lefts you behind”

SUNK COST TRAP

Cost that has already been incurred by past decisionWe have gone too far

to draw back !!!

• Unwillingness to admit poor decisions, worry about public/private criticism

• Old investment of resources that are not recoverable

• Deep seeded bias to make decision that justify or protect the past decision

How to do about it? Seek advice from people who

did not involved past decision

Examine why admitting to an earlier mistake distress you

Do not create a failure-fearing culture.

The Confirming - Evidence Trap

“ Yes Sir, God does play dice and do not tell God what to do”

Niels Bohr

A man looks for what he wants to see

• We are unaware to decide what we want to do before figure out why we want to do it

• Being more engaged by things we like than things we dislike

How to do about it

Avoid accepting confirming evidence without asking Need someone argue against your evidence Be honest with yourself about your motives In seeking advice, do not ask leading question.

The way a problem is worded for “ framed” can profoundly influence the choices we make

FRAMING TRAP

LOSS DISLIKE

RISK SEEKING

How to do about it• Do not automatically

accept initial “frame”• Challenge with

different frame, reference points

Unsinkable Even God can not make it sunkApr 10 1912

It did sink !Four days later, Apr 14 1912

PRUDENCE TRAP

OVERCAUSTIONESS !

RECALLABILITY TRAP

How to do about it

To avoid overconfident by examining extreme, low and high ends of possible range of value

To avoid prudence trap one should check to make sure any forecast inputs are reasonable

To avoid recallability one should examine assumptions to make sure not biased by past experience

AWARENESS

AWARENESS

AWARENESS

AWARENESS

AWARENESS

Reference:

The Hidden Traps in Decision Making by John S. Hammond, Ralph L. Keeney, Howard Raiffa.

Thinking, Fast and Slow by DANIEL KAHNEMAN. Documents, video from youtube.com

THANK YOU VERY MUCH FOR YOUR TIME