finish the homework Read HBR “The hidden traps in decision making” Hammond, Keeney, & Raiffa (2006) Required: Unit Journal Posts – Individual Students

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  • Read HBR “The hidden traps in decision making” Hammond, Keeney, & Raiffa (2006)


  • Unit Journal Posts – Individual

Students will make three (3) Posts per UNIT. Each Post must be a MINIMUM of 200 words.

Each Post must consist of the following three (3) elements:

  • an important fact from the UNIT reading,
  • what this fact means,
  • why this post is important to you.

 Student will post one (1) response per UNIT. Students will select another student’s Post and provide an encouraging response to the ideas expressed by that student. Each Response must be MINIMUM of 100 words.

Post Journal in Unit 4 Journal

Due Feb 07, 2022 – 11:30pm (PST).

The Hidden Traps in Decision Making

Making decision is the most important job of any leader. It is tough and risky.

Bad decisions can damage a business and a career, sometimes irreparably.

So where do bad decisions come from?

They can be traced back to the way the decision were made:

the alternatives were not clearly defined,

the right information was not collected,

the costs and benefits were not accurately weighed.

Research shows that we use unconscious routines to cope with the complexity inherent in most decisions.

The routines are know as Heuristics – an approach that uses practical methods that are not necessarily guaranteed to end in optimal results.

The process may not be logical, rational…but sufficient to reach a goal. Heuristic people who act on instinct default to mental short-cuts.

These short-cuts are influenced by:



irrational ideas.

These are psychological traps – organized flaws – that cause distortion.

Mental short-cuts help us make continuous stream of distance judgements required to navigate problems.

The fuzzier and far away a problem seems to us in our mind, the easier it is for us to rely on heuristics.

Because the heuristic person put issues out into the peripheral, they tend not to see the imminent dangers.

Heuristics trick our minds into thinking that things are more distant than what they really are.

Heuristics is hard-wired into our brains making us make decisions on these “distant” issues on irrational thinking, biases, and other sensory misconceptions.

These psychological traps can undermine everything to where we fall into traps.

We will examine the psychological traps that are likely to undermine business decisions.

The Anchoring Trap

When considering a decision, the mind gives disproportionate weight to the first information it receives.

This means that the first bit of information/sound your brain receives influences your mind to any other second question. You become trapped by what you first hear.

This can come in the form of:

a comment,

an accent,

a person’s skin colour, or

a person’s clothing.

This trap places too much weight on past experiences/stimuli as being a reliable and relevant way to judge or assess current and new information.

What can we do about it?

These anchors are unavoidable therefore cognitive mechanisms need to be set in place to challenge this trap, thus reducing their impact:

Purposefully view problems from different perspectives.

Think before allowing yourself to be anchored by others.

Be open-minded and seek information and opinions from several people

It is important that you do not end up anchoring others.

If you reveal too much of your own, especially if you are a leader, preconceptions, they may end up anchoring others.

The Status-Quo Trap

We all like to believe that we make decisions rationally and objectively. However, we all carry biases and those biases influence the choices we make.

Strong biases perpetuate deciding based on the status quo.

Making decisions on status quo is comfortable because you may be avoiding taking action that would upset what others have come to accept as normal.

Staying within the status quo does not challenge us, does not increase our responsibility, and does not open ourselves up to unwanted criticism. Sticking with the status quo is psychologically less risky.

Research shows that the more responsibility you have to make decision, one tends to choose to stick with the status quo.

When there are alternative, the status quo will be more likely chosen.

The status quo does not require any additional effort.

What can you do about it? – Again, a set of cognitive mechanisms:

Continually remind yourself of your objective. Examine how you would be serving your objective if you stuck with the status quo.

Never think of the status quo as an alternative. Doing nothing is ever a solution.

Avoid exaggerating the effectsresults of moving away from the status quo.

When evaluating alternatives focus on the future potential rather than on past/historical results.

If you have several alternative, don’t default to the status quo because of the heightened effort and responsibility.

The Sunk-Cost Trap

Another bias is that once time, effort and money has been invested into a decision, you are stuck with the decision because of the sunk-costs and efforts.

The belief is that the past is irrecoverable.

We know that sunk costs are irrecoverable to the present


we project this same thought to the future leading us to make inappropriate decisions

Either people are unwilling to admit error or it is easier just to continue on.

Sometimes a corporate culture reinforces the sunk-cost trap.

If there are real or perceived penalties for making a past bad decision research shows that managers will be motivated to let failed projects drag on.

What can we do about it?

Seek out people who were not part of the original decision. They can remain objective because they have no past invested history associated with the decision.

Be aware of the influence of sunk-cost biases made by subordinates.

Don’t cultivate a failure-fearing culture that leads employees to perpetuate their mistake.

The Confirming-Evidence Trap

This bias leads us to seek out information that supports our existing instinct or point of view while avoiding information that contradicts it.

The confirming-evidence bias affects:

where we go to collect evidence but also

how we interpret the evidence

leading us to give too much weight to supporting information and too little to conflicting information.

When confronted with information with balanced argument we have a tendency to:

select, and

support …..

……that information to which we hold strong opinions.

The information that seems to contradict our thinking is dismissed without careful consideration to the facts.

We will become much more engaged with the things that confirm our existing likes and biases.

What do we do about it?

Check to see if we are examining all evidence with equal rigor

Check your motives

When seeking advice don’t ask leading questions that invite confirming evidence.

The Framing Trap

The way we choose to frame a problem or a question influences the choices we ultimately make.

We tend to frame things the way we want to see things or by the status quo.

You can frame a question with a negative or a positive spin – i.e. is the glass half empty or half full.

By using negative speak you can direct people to take the half empty approach.

Another example is framing with different reference points:

if you invest 100K you have a 50% chance of making a million dollars selling sheep. Or you have a 50% chance of loosing 100K trying to make a million dollars selling sheep.

Research shows that different reactions result from the different reference points presented by two different frames.

Eg. 50% of the people found this show so exciting. 50% of the people found the show to be super boring.

What can you do about it?

Don’t automatically accept the initial frame

Pose issues and problems in a neutral manner – including both gain and loss

Examine the way others have framed things before you accept information

Estimating and Forecast Trap

Making estimates and forecasts based on fairly certain information may be ok.

Estimating and forecasting where there is uncertainty is another matter.

Feed back is rarely given as to accuracy. Our minds find it very difficult to become calibrated for making decisions in the face of uncertainty.

When confronted with uncertainty we allow our minds to become clouded and the potential results to be distorted. This distortion does not allow us to assess probabilities.

This is an uncertainty trap.

There are three uncertainty traps:

1. The overconfidence trap – we are actually overconfident about the accuracy thus leading to errors in judgement.

Those who are overconfident about the accuracy within uncertainty, actually set a very very narrow range of possibilities. Their scope is very narrow.

2. The prudent trap – people are extremely cautious in uncertainty in order to stay on the safe side. This safe side could be real or perceived. Research shows that over cautiousness is encoded in formal decision-making.

This approach is so ingrained that even when worst case scenarios are infinitesimally possible of happening, the formal process remains overly cautious.

The past can overly influence us because of dramatic past events.

These dramatic events can distort our thinking and cause us to see or believe in a higher probability of something going wrong…..

…. even if there are no strong indicators.

What can we do about it?

to reduce overconfidence with estimates and forecasts make sure that you evaluate an outcome by looking at the extreme possibilities.

Minimize the distortions from recallability by cognitively not allowing past experiences cloud your ability to rationally think through the issue.

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