In our fast-paced and complex world, we need simplifications and shortcuts to be able to make timely decisions. In most situations, these mental "shortcuts" are very helpful and ensure our ability to make decisions and act. In some situations, however, they lead to suboptimal decisions. Learn 10 ways to improve (+) or worsen (-) the quality of your decision-making.
Tip 1: Availability bias
We like to base our thoughts and actions on available information and documents. We remember information that is easily accessible, easy to understand, up-to-date and easy to remember better. We don't consider what information we don't have. Information with emotional significance and information that is used frequently are also easier to access. Because of this easier mental accessibility, we overestimate their significance.
(-) Make your decisions based on information that is immediately available to you and that you can understand without thinking too much. Use familiar sources and never question their arguments.
(+) Define the goal of your information search and determine the criteria for making a decision. Select information and sources based on these criteria and your decision goal.
Tip 2: Confirmation bias
Our interest determines what we perceive. You are interested in buying a certain car. Suddenly you see this model repeatedly on the streets. In the spirit of reducing complexity, our perception focuses on reports that correspond to our interests AND our opinion. We prefer to talk to people who share our views, read newspapers and watch programs that reflect our worldviews.
(-) Only look for information that confirms your assumption, your current preference. Look for as much approval as possible and avoid any critical voice.
(+) Become aware of your first impression, your current preference. Actively look for arguments that contradict these viewpoints. Talk to people who disagree with you and read reports and media whose opinions you do not share.
Tip 3: Information bias
When we are faced with important decisions, we tend to gather as much information as possible. What we forget is that human information processing is limited to the recording of 7±2 elements. Information beyond this is ignored or leads to a kind of "system overload". Inability to make decisions or memory problems can be the result. The fatal thing is that as the amount of information increases, the quality of our decision does not increase, but our confidence in the correctness of our choice increases. We become more willing to take risks.
(-) Absorb all information, regardless of its relevance. Be aware of how intensively and thoroughly you have dealt with the information search. Make it clear that you are fully informed and extremely competent to make decisions.
(+) Consciously select information based on your criteria and your objectives. Limit the time for gathering information. Prioritize this information according to its relevance and evaluate it within a defined time. Pay attention to the quality and not the quantity of the information.
Tip 4: Illusion of control and magical thinking
We tend to underestimate the importance of chance and overestimate our own effectiveness. This illusion of control increases with early positive feedback, familiarity with the task, amount of information obtained and the degree of personal involvement.
(-) Your preferred alternative has few but serious potential negative consequences? Don't worry. If these do occur, you will already know how to deal with them.
(+) Not all future changes can be foreseen and safeguarded. Many factors are not controllable. Bear this in mind when making your decision. Consider which factors are outside your sphere of influence. What negative consequences can be expected? How can you deal with them if they occur? Create alternative courses of action and adaptation options for the future.
Tip 5: Overconfidence Bias
Aren't you a better driver than average? And more intelligent than Mr. Mustermann? In general, we overestimate ourselves and our abilities.
(-) Put on a Superman shirt and let everyone address you as "Your Majesty". Tell yourself and others how unique and above average you are.
(+) Enjoy and celebrate your successes. However, don't assume from the past that your future decisions will also be crowned with unconditional success. In moments of elation, avoid expanding your risk tolerance and choosing riskier alternatives.
Tip 6: Anchoring heuristic
Arbitrary numerical data, such as year of birth, current date or favorite number, influence our information in price estimates and our willingness to pay. If we have no rational reference point for our estimate, we refer to immediately available values, regardless of their relevance to the object of the estimate.
(-) Are you unsure what the "fair" price is for a good? Leave your price feeling to chance. Enter the term on the Internet and use the first price that comes up as a reference point.
(+) Without an anchor, we are unable to estimate numerical values or determine prices. In order not to become dependent on a single value, determine a range of possible values or prices. Check the quality of these values for your current question. If the information is not very meaningful, look for more appropriate starting points.
Tip 7: Home bias
From our own perspective, we overestimate the international importance of domestic companies and developments in our own company. We feel safer because we think we can better assess the mentality of the company management, get new information more quickly and are better informed about the situation.
(-) Live by the motto: If the farmer doesn't know it, he won't eat it.
(+) Obtain information on how a situation or question is viewed in other cultures or companies. How do other industries deal with a similar issue? What ideas can you use to solve your own problem?
Tip 8: Endowment Effect
We assign a higher value to objects that we call our own than if they were not part of our possessions. Private car sellers often demand a price that is significantly higher than the list price and stock owners expect a higher selling price than is currently offered on the market. The endowment effect sets in quickly. Even a test drive, a product test at home, makes us experience the return of the borrowed item as a loss of ownership.
(-) Give names to potential and existing assets and objects. If you sell one of these items or if a process you helped develop is to be replaced, recall all the positive experiences you have had with it. Imagine the huge losses that would be associated with the sale or decommissioning.
(+) Ask yourself the following hypothetical question: If I did not own this item or had not been involved in this process, what value would I assign to it today? What do I gain if I let go of it?
Tip 9: Shelf Serving Bias
We tend to make self-serving attributions. We look for the cause of negative events and failures in the environment and the situation. Positive results and successes, on the other hand, are attributed to ourselves and our own performance.
(-) First evaluate the result of your decision. If it is as desired, argue purely on the basis of your competence. Use this opportunity to strengthen your overestimation of yourself. If, on the other hand, the effect is negative, make it clear that you are not responsible.
(+) Use the actual-target comparison to analyze the extent to which you have achieved your goal. Look for internal and external factors that are helpful and hindering. Use this as a learning opportunity. How can you deal with internal and external hindering factors in the future?
Tip 10: Status Quo Bias
In situations of uncertainty, we do not avoid making active decisions. We leave the course of events to fate. This makes it easier for us to attribute negative developments to external factors (see Self Serving Bias). We regret active decisions more than those that are not made.
(-) Before you make a decision: Be clear about the risks and uncertainties involved in a change. At the same time, consider the advantages and the provenness of the current situation.
(+) Ask yourself: What happens if nothing happens? Maintaining the current status is also an active decision. What are the consequences and disadvantages of maintaining the current situation? Use the options presented here to change the quality of your decision. Choose one or two aspects and experience the difference in your decision-making.
Would you like to find out more about decision management? Make decision-making processes in your company more effective? We would be happy to discuss things with you in more detail and to support and implement measures.
Your decision.
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