KareAnderson  

Winners discount information about lucky breaks and chalk uptheir right calls to superior judgment, whereas losers tend to emphasize therole of bad luck -- rather than bad judgment -- when their predictions gowrong.”

 That’s what Cornell University psychologist, ThomasGilovich, discovered from his experiment with NCAA fans. See more in thisarticle by Shankar Vedantam of the Washington Post.

 Learn how you can become more lucky by making smarterchoices. Read a favorite book of mine, co-authored by one of my mentors, HowardRaiffa.

 Most of us fool ourselves sometimes when making decisions.Here are some of the most common ways and what you can do to make smarterchoices.

 Think back on a crucial decision you’ve made in your work orwith a loved one that haunts you still. Now, consider some smaller decisionswhere you realize in retrospect that, if you’d made another choice, you’d havesaved a situation, time, “face”, a relationship, money or another resource, orsimply avoided aggravation.

 What if you found out that your mind played tricks on you?

 You could havethought things out better, and made a wiser choice? Perhaps you were relying onyour “gut instincts”, yet, in fact, were fooled by unconscious making traps weall fall into when trying to figure out what we should do.

 According to renowned negotiation and games theory expert,Howard Raiffa, we are destined to repeat the same faulty decision-makingprocess and face more grief from the poor results if we don’t gain insightsinto some of these traps.

Raiffa has found that the fault often lies not in thedecision-making process but rather in the mind of the decision maker. The waythe human brain works can sabotage our decisions.

Here are some insights into the most well-documented trapswe set for ourselves in making decisions. Perhaps they can help you make betterdecisions in the future.

How We Often Distort Our Decision Making

 We useunconscious routines, called heuristics, to cope with the complexity inherentin decision-making. They serve us well in most situations. For example, injudging distances, we equate clarity with proximity. The clearer an objectappears, the closer we judge it to be. The fuzzier, the farther we think it is.Like most heuristics, it is not foolproof. On days that are hazier than that towhich we are accustomed, our eyes will tend to trick our minds into thinkingthat things are more distant than they actually are.

 For airplane pilots this distortion could be catastrophic ifthey weren’t trained to use other truly objective measures and instruments.While this decision-making flaw is based on sensory perception others are basedon biases, still others on irrational anomalies in our thinking. They arepotentially dangerous because they are invisible to us. They are hardwired intoour thinking so we fail to even recognize we are using them.

Here are some of the most common decision-making traps - and what youcan do to overcome them.

Anchoring

 How would you answer these two questions?

 1. Is thepopulation of Turkey greater than 35 million?

 2. What’s your best estimate of Turkey’s population?

 If you are like most people, the figure of 35 million(researchers chose arbitrarily) influenced your answer to the second question.When behavioral scientists ask variations of these questions to groups ofpeople many times over the past decade. In half the cases, 35 million was usedin the first question, in the other half, 100 million.

 Without fail, the answers to the second question increase bymillions when the larger figure is used (as an anchor). When considering adecision, the mind gives disproportionate weight to the first information itreceives. Initial impressions, estimates, or other data anchor subsequentthoughts and judgments. The implications to influence another’s perceptions aremind-boggling and can take many guises. A colleague can offer a comment, or astatistic can appear in the morning newspaper that will influence yoursubsequent decision making on that topic.

In business, one of the most frequent “anchors” is a pastevent or trend. A marketer in attempting to project sales of a product for thecoming year often begins by looking at the sales volumes for past years. Thisapproach tends to put too much weight on past history and not enough weight onother factors.

 Because anchors can establish the terms on which a decisionwill be made, they can be used to influence how someone feels about a politicalissue or as a bargaining tactic by savvy negotiators.

 Reduce the impact of the effects of anchoring in these ways:

 1. Be open-minded. Seek information and opinions from avariety of people to widen your frame of reference, without dwellingdisproportionately on what you heard first.

 2. In seeking advice from others, offer information -- justthe facts without your opinion -- so that you don’t inadvertently anchor themwith your thoughts. Then you can benefit from hearing diverse views on thesituation without their views being colored or anchored by yours.

3. Whoever most vividly characterizes the situation usuallyanchors the other’s perception of it. That’s an immensely powerful ability.Others literally see and discuss the situation while anchored from that mostmemorably stated perspective. The most vivid communicator in the situationoften has the most power as she can literally created the playing field onwhich the game will be played.

 Be especially wary of anchors in negotiations. Think throughyour position before any negotiation begins in order to avoid being anchored bysomeone else’s proposal or position.

The Status-Quo Trap

We instinctively stay with what seems familiar. Thus we lookfor decisions that involve the least change.

For example, when radically new products are introduced theyare made to look like an existing and familiar product. The first cars lookedlike horseless carriages. The first online newspapers and magazines had formatsmuch like their print counterparts.

To protect our egos from damage we avoid acting to changethe status quo, even in the face of early warnings that demonstrate that changewill be safer. We look for reasons to do nothing.

For example, in one experiment, a group of people wererandomly given one of two gifts of approximately the same value, half receiveda mug, the other half got a large, Swiss chocolate bar. They were told thatthey could easily exchange the gift they received for the other gift. While youmight expect that about half would have wanted to make the exchange, only onein ten actually did. The power of status quo kicked in within minutes ofreceiving an object.

 Other experiments have shown that the more choices you aregiven, the more pull the status quo has. Why? Because more choices involve moreeffort while selecting the status quo avoids the stress of making a choice

In business, the sins of commission (doing something) tendto be punished much more severely than sins of omission (doing nothing). In allparts of life, people want to avoid rocking the boat.

What can you do? Think of your goals first, when preparingto make a decision, then review how they are served by the status quo ascompared by a change. Look at each possible change, one at a time, so as to notoverwhelm yourself and then instinctively want to “stay safe” and unchanged.

Never think of the status quo as your only alternative. Askyourself whether you would choose the status quo, if, in fact, it weren’t thestatus quo

Avoid the natural tendency of exaggerating the effort orcost or emotional reaction of others or for yourself if you change from thestatus quo.

Remember that the desirability of the status quo may changeover time. When considering a change, look at possible future situations. Ifyou have several alternatives that are superior to the status quo, avoid thenatural tendency to fall back upon the status quo because you are having a hardtime choosing between the other alternatives.

The Justify- Past-Actions Trap

The more actions you have taken on behalf of a friendship,choice or belief, the more difficult you find it to change direction oracknowledge that you now feel differently. Whenever you invest time, money, orother resources, or your personal reputation is at stake, you will find it moredifficult to change your decision or course of action.

Suppose, after walking around a store, a low-key clerk asksyou to describe your favorite feature of the store. You answer. She asks you toelaborate or show her. Each time you move, speak and demonstrate what you mean,you deepen your belief, get more articulate about it and are more likely totell others your view after you leave the store.

Suppose you pour a great deal of time and effort into anissue. Because you have already used resources to prepare to put the process inplace, you will find it difficult to withdraw, even when others are notenthusiastic about your idea. If you have a once-close childhood friend who hasnot been supportive to you for years, you’ll be reluctant to acknowledge thatchange and are likely to act as if you are still close. Banks used to continueto lend to businesses that had fallen back on payments, thus throwing goodmoney after bad.

 For all decisions with a history, make a conscious effort toset aside your past actions, investments of emotion, money or other resources,as you consider whether to change direction. Seek out and listen to people whowere uninvolved with the earlier decisions. Examine why admitting to an earliermistake distresses you. If the problem lies in your wounded ego, deal with itstraightaway.

As the well-known investor, Warren Buffet once said, “Whenyou find yourself in a hole, the best thing you can do is stop digging.”

Don’t cultivate a failure-fearing culture in the peoplearound you at home or at work so that others perpetuate mistakes rather thanadmitting them to you and changing course. Set an example of admitting mistakesin your choices and self-correcting so that others believe they can do likewisewithout penalties from you.