Decision-making biases. Heuristic routines and 6 mind traps when deciding

Our mind, the least thought of enemy

The 6:30 am alarm clock rings, we get up and start the journey to our office. We decided to take a bath. We choose what clothes we are going to wear while we have our cup of coffee or the first morning mate and we immerse ourselves in our beginning of the day. We arrive at our work, we sit at our desk where we find the latest news of the day. We received a call to decide the direction of a project. Depending on the latest news we execute. As we can see, we are constantly making decisions, from the most basic to the most complex, we live immersed in a reality that requires us to choose between alternatives.

Our mind to alleviate decision making contains within it unconscious routines called " heuristics ". These are internal processes that allow us to automate choices and help us, based on our experience, to choose alternatives more quickly and efficiently. For example in the selection of means of transportation to the office.

The same heuristics that allow us to lighten our decision-making burden can become deadly traps when making decisions. We will call this phenomenon the " milk horse syndrome ". The name comes from looking at this animal in that particular state where it only sees the path that its dark circles allow it to walk straight where its eyes are limited to seeing. Something similar happens to us when deciding. Without realizing it, our mind wears dark circles that only allow us to see a partial reality.

Decision-making biases

These ear muffs to which we refer are the same "heuristics" that in their quest to simplify our thinking lead us to make decisions with biased information. In this article, we are going to analyze six of these mental traps that our mind imposes on us and different ways to mitigate their effect.

One of the forms it takes is anchoring. Anchoring is related to stereotypes and past events.It appears at the moment of decision-making, leading us to stop analyzing a situation in all its dimensions, or with the necessary depth, only due to the presence of a similar situation from the past or by entering it into a stereotype with pre-established patterns. Dark circles prevent us from seeing this situation with its peculiarities. We standardize them and solve them in functions to events that are not conditional on what is really happening. On the other hand, they are manifested when we take by reference some value or some particular situation and then we measure all according to this parameter. For example, in a negotiation for the purchase of an item, if the seller begins the conversation by saying that the value is 10 and we buy it at the value of 6, we will feel happy since we anchor our mind on a higher value.This is dangerous when we do not have real reference values and they lead us to anchor ourselves to high values. On the other hand, this bias can be transferred to third parties in search of confirmations. When we ask a leading question like "This project is wonderful! Not?" Or “This supplier sells us for $ 5 it's a bargain! Doesn't it seem the same to you? "

Another way these heuristics appear is in our attachment to the status quo, dragging us into our comfort zone and avoiding making decisions that put it at risk. We shield ourselves to the best of bad known than good to know. We don't like to go against what we have already decided. The risks of going against this status quo are high, we are going against our pride, our previous visions. The problem that this bias has is that the status quo is valued more than the rest of the solutions, giving rise to the elution of decision-making based on it.

One of the biases to which we are most exposed is related to sunk costs. This appears in the moments that we are analyzing decisions already taken or we see the evolution of a product that we launch on the market or even in the middle of a project in which we are developing. This bias makes us go in the wrong directions in an effort to justify those decisions that are part of the past, having as a stronger foundation the "we already spent…" "we already allocate resources" despite seeing that the results are not as expected, leading us in a large number of situations to spend more, invest more in projects that are not having the performance that they should without contrasting against any alternative option that could improve this situation.It is difficult for all of us to take a turn in the face of these events on the one hand because of the costs that have already been assumed but mainly because of something inert to our human condition, which is the difficulty of admitting an error.

Now we will delve into another of the biases with the greatest impact on us in our day to day life. How many times have you looked for information or asked for information to make an important decision? Almost certainly in almost all decision-making situations we refer to sources to validate our intuitions or perceptions. Of these times you have searched for information, how many times have you searched for information trying to refute your thinking? How many times have you oriented your search from a negative perspective? How many of us have looked for a no before a yes?The bias we are dealing with is the so-called positive affirmation. This is manifested when at the time of making the decision, the only thing that is trying to obtain is validating information by turning a deaf ear to any other type of information. In this way we convince ourselves of something without having a global vision of the situation, which can lead us to unwanted paths when faced with that decision.

The next mental trap that we will uncover is planning and forecasting characterized by overconfidence or, conversely, overprudence. This occurs when, without any apparent foundation, we plan and overestimate or underestimate. On the other hand, another of the great issues of this bias is the weighting of the latest information over the rest.

Finally, the last of the biases is that of the frame effect. This consists of seeing reality from the perspective in which we are involved without seeking more global points of view. It is closely associated with the concepts of anchoring and status quo. For example, when talking about a new proposal, many times we contrast it from our current situation and we do not move away from it to look for a more objective ground wire. In this way, great proposals can be clouded by a distorted vision of reality caused by the moment in which we find ourselves or the past experiences we have had.

In Table 1.1 we will analyze how we can mitigate the impact of these biases.