4 Reasons We Make Dumb Decisions and 7 Ways to Make Smart Decisions

Our ability to develop solutions that don’t work is only exceeded by our capacity to misjudge.

Daniel Kahneman identified nearly 40 cognitive biases in Thinking, Fast and Slow. All lead to bad decisions.

You end up making bad decisions when you need to be right. Image of cactus plat.

4 reasons we make bad decisions:

#1. We overestimate the likelihood of future events based on how easily they come to mind – Availability heuristic.

There were 57 unprovoked shark attacks reported globally in 2022. But if a shark attack is reported we worry about shark bites, even if it was in a different part of the world.

#2. We believe someone who is good at one thing is good at other things – Halo effect.

TV doctors on pharmaceutical commercials.

#3. We make judgments based only on available information – WYSIATI (What You See Is All There Is) bias.

You buy a house after seeing it during daylight hours only to learn the neighborhood is noisy at night.

#4. You overestimate the predictability of past events – Hindsight bias.

“I knew that.”

You see the winning lottery number and feel like that’s the number you would have played.

Don't trust yourself. "We are blind to the obvious, and we are also blind to our blindness." Daniel Kahneman

7 ways to improve your decisions:

#1. Doubt yourself.

You could be wrong even though you feel right. Use doubt to motivate exploration.

#2. Seek alternatives.

Ask for suggestions. Say, “And what else might work?”

#3. Sleep on it.

Avoid snap judgments on important matters.

#4. Journal.

Writing is thinking. Challenge yourself to write down three viable alternatives.

#5. Use a decision-making framework.

SWOT – Strengths, Weaknesses, Opportunities, and Threats.

Premortem – Imagine your project goes wrong in six months. What could we have done differently to prevent failure? What did we leave undone that contributed to failure?

#6. Explore execution.

Explain your plan and ask, “What needs to be in place for this to happen?”

#7. Leverage diversity.

Seek input from diverse sets of people including age, gender, race, and experience.

How can we make smart decisions in the face of cognitive biases?

Still curious:

A Premortem: Reverse Positive Thinking for Success

5 Questions for Considering the Alternative

Decision-Making for Leaders: Beyond Pros and Cons

Category : Leading