Decision Traps in Decision Making
Decision making is an integral part of management. On many occasions managers are not conscious of the decisions they make every day. Whether decisions are made consciously or unconsciously, they have direct or indirect effect on an organization (Russo & Schoemaker, 1990, p.23).
To be good decision makers, managers have to make high quality decisions in all or most of their decisions. This however is not always the case; various errors are committed in decision making. One of the common problems in decision making is effects of decision traps. Decision traps interfere with decision making and often lead to wrong conclusions. The essay reviews two articles addressing decision making traps.
Many scholars have been concerned with improving decision making. Some scholars relate mistakes in decision making to the psychological state of the decision makers. One of the issues that are related to poor decisions is decision traps.
Most decisions are made by use of Heuristic or rule of thumb method. Heuristic is the general way of making decisions where a decision maker arrives to a decision through intuition. This method however is prone to biases by the decision maker. The biased can have very severe effect on an organization.
Ralph Keeney, John Hammond and Howard Raiffa address the traps that can affect decision making, in their article: The Hidden Traps in Decision Making (Hammond, Keeney & Raiffa, 1998, p. 1).
Linda Henman, in her article, How to Avoid the Hidden Traps of Decision Making, looks at the ways in which decision traps can be avoided when making decisions (Henman, 2006, p. 1). This is a review of the two articles. The reviews compare and contrast the issues addressed in the articles as they relate to better decision making.
Decision traps are identified as some of the factors that affect decision making. Decisions in management determine the way in which resources in an organization would be used.
To make these decisions, the decision makers should be in a position to evaluate all the factors involved without bias and make the best decision for a certain situation. Keeney et al claim that psychological decision traps are hard wired in an individual decision maker (Hammond, Keeney & Raiffa, 1998, p. 1).
They say that the decision traps are subconsciously making them not easy to recognize. Keeney et al admits that decision traps can not be completely eliminated but say that being alert of them can help to avoid judgment disaster. While Keeney et al take a descriptive approach, Henman takes a normative approach.
She proposes ways through which decision traps can be avoided and better decisions be made. Keeney et al and Henman identify various similar decision traps. However, Henman identify additional decision trap that is associated with group decision.
Group decision trap, according to her, can lead to major error in decision making. Reading the articles reveals how venerable human decisions are. The articles raise the need for strategic decision making in organization. Since an individual cannot be relied on for best decisions, organizations should have policies and procedures to assist in decision making.
The value of a decision is very important. Some decisions, when wrongly made, have high implication on an organization. For instance, mistake in decision making can have high financial implication while others can result in the loss of business opportunity. Keeney, Hammond and Raiffa associate mistakes in decision making to various hidden decision traps.
According to them, most decision makers make major mistakes because of failure to recognize the risk of decision traps. They say that failure in a decision can be traced back to the way the decision was made other than the mere decision. They claim that in some cases alternatives to a decision are not reviewed, enough information to a decision is not collected and cost and benefits of the decision are not accurately analyzed.
The authors however look at the problem of poor decisions from another perspective. According to them, the psychological state of the decision maker can have a high influence on the decision made. They identify eight psychological decision making traps that can influence the value of decision (Hammond, Keeney & Raiffa, 1998, p. 2). Keeney et al say that most decision makers are influenced by the decision traps without their knowledge.
Making decisions is mostly assumed to be an easy task. However, the many errors that are made in decision making are evidence that the activity is not an easy task. Prior preparation before making a decision is very important; the decision makers must be equipped with enough information in order to make a good decision.
However, prior preparation is not the only necessary condition for good decision. The mental state of decision makers can influence the way in which they conduct the whole process of decision making. The authors are right in recognizing the influence of the psychological state of decision makers on the value of the decision made (Hammond, Keeney & Raiffa, 1998, p. 5).
Stereotypes in the decision makers can influence searching for background information, processing of preliminary information and other decision making processes. Overall, psychological state of decision makers can lead to decision traps that compromise the quality of a decision.
Henman takes a normative approach to decision making traps. While Keeney et al mostly describe the decision traps, Henman give practical ways to avoid the traps. She tries to find workable solutions to decisions traps by offering ways in which a decision maker can avoid a particular decision trap.
In her article, Linda Henman recognizes the risk of decision making traps while one is making decisions. According to her, leaders are respected not by their enthusiasm or other qualities but by the value of the decisions they make (Henman, 2006, p. 2).
However, Henman argues that not all leaders are able to make good decisions. She further posits that poor decisions do not always result from the incompetence of a decision maker but from the decision maker being trapped in decision making traps.
Some decision making traps are obvious and have been addressed in most management literature. However, according Henman some decision making traps are not obvious. These, she argues contribute highly to most of the mistakes in decision making. She advises leaders to be aware of hidden decision making traps in order to avoid them and make better decisions.
According to her, showing good judgment and avoiding group decision and decision making traps is the sure way to be a good leader. Henman identifies groupthink, failure to frame, complexity, status quo, anchoring and sunk cost trap as some of the common decision making traps (Henman, 2006, p. 3).
Furthermore, Henman submits that decision making is the major role of leaders. However, this role is not a reserve of leaders only but extends to every person who makes decisions. Nonetheless, good decision making is one of the necessary conditions for a leader.
A leader should be able to make quality decisions on behalf to the individual he or she leads. To make good decisions, it is imperative for a leader to have the necessary information and support. In most cases, a leader depends on support from other individuals in making decisions. Despite the support from other individuals, the responsibility for a decision befalls a leader (Drucker, 2001, p.98).
Thus, leaders should work on way to improve their decisions. According to Henman, leaders should be aware of decision making traps. This will help in knowing when one is trapped in the decision making traps and enable one to make better decisions (Henman, 2006, p. 3). Henman, however, does not explain decision making traps. What is clear from her article is that decision making traps are the psychological factors that influence decision making.
In their article, Ralph, Hammond and Raiffa compare decision making in organizations to decisions made in day to day activities. According to the authors, similar mistakes as those made in day to day Heuristic decision making can occur while making decisions in an organization.
The authors say that the Heuristic method used in daily decision can deceive a person that a decision is right while is actually wrong. According to them, it is in the same way that psychological traps deceive a decision maker that a decision is good when it is not (Hammond, Keeney & Raiffa, 1998, p. 5).
The comparison of mistakes in organization decision making to those in day to day decision brings out the human face of decision making. Henman brings out the relationship between decisions in organization and decisions in other areas even more clearly.
The author compares decision making mistakes in organizations to mistakes in other areas such as politics and exploration. For example, the author highlights The Bay of Pig, Challenger disaster and Watergate breaks as some of the mistakes that resulted from groupthinks decision trap. According to the author, similar mistakes can be committed in organizations when groupthink is present.
Anchoring trap is identified in both articles. According to, Hammond and Raiffa, anchoring trap is a decision trap that occurs when a decision maker bases a decision on the first information he or she has (Hammond, Keeney & Raiffa, 1998, p. 7).
The authors give an example that illustrates the point clearly. In the example, the author ask the reader to estimate the population of Turkey after asking whether the reader thinks the population is above thirty five million. Having been provided with the figure, it is more likely for one to make an estimate that is around the figure provided.
The authors claim that similar situation occurs in decision making when the mind gives disproportional weight to information that is received first. On her part Henman defines anchoring trap in a different but related way. According to her, anchoring decision trap occurs when decision maker tend to maintain the status quo and overly on a single information in making decisions.
She argues that, the disproportionate weight put on a single issue may affect the quality of a decision (Henman, 2006, p. 5). Good decision making evaluates all the issues concerning that decision. Over reliance on single or limited information in making decision make mistakes more probable.
Anchoring decision making trap is very challenging to overcome. Henman argues the fact that human beings tend to think in relative terms makes it difficult to overcome the trap. Keeney et al posits that an anchoring trap can disguise itself in various forms.
The bias can result from a comment by a colleague to unsupported statistics. The consequence of anchoring trap is failure to consider all the facts or information when making decision. As a solution, Henman suggests that decision makers should avoid information that can lead to bias.
For example, the author suggests that leaders should avoid making comments that can lead to bias in making decisions. Although comment from an influential person can influence the decisions of other individuals, it is very hard to avoid it.
The solution proposed by Henman seems to be simplistic in that is assumes that leaders are immune to wrong decisions. Keeney et al provide a much more effective solution to this decision trap. According to the authors, there is the need to explore various perspectives to a problem in the decision making process.
By considering different ways of viewing a problem, a decision maker is able to avoid the tendency of relying on single or limited information (Bell, Raiffa & Twersky, 1988, p.53).
The authors also suggest that decision maker should be open-minded by seeking advice from different individual. In addition, the authors warn decision makers against anchoring consultants or other people from whom they seek advice by avoiding making unnecessary comments.
Status quo decision making trap is highly addressed by various authors. The two articles also identify status quo trap as one of decision making traps that is common with many decision makers. Making decisions is not easy for the majority of people because of fear for failure or attachment to the known.
In organizations, there are many cases where decisions are avoided just because they put an organization in an uncertain situation. According to Keeney et al, human beings have a tendency to make decisions that retain the status quo. Thus they argue that perception that decisions are always made rationally is not true since most decisions are tagged to the known facts.
They give an example of a decision to introduce new products where the new product tends to be similar to other products in the organization. According to them, similar situation happens in decision making. The decision makers are more likely to make decisions that retain the status quo rather than introduce new situation. This observation is evident in most areas of life.
As a force of habit, this tendency is likely to influence decision making. The authors claim that this tendency is a psychological way for protecting one’s ego from failure. As a solution to this tendency, Henman suggests that decision makers take retaining the status quo as one of the solutions and then consider other options.
She emphasizes the need for self-awareness; being aware of the tendency to retain status quo can help decision makers to avoid this trap.
An organization can-not grow without making decisions. By lowering the quality of decisions, decision making traps have negative effect to an organization (Gunther, 2003, p. 45). Basing decisions on other decisions made in the past is one of the mistakes made in decision making.
Sulk-cost trap is the decision making trap that is associated with basing decisions on decisions made in the past. According to Henman, sulk-cost decision making trap is common mostly when past decisions were not good. According to her, this decision trap occurs mostly when decision makers try to justify the past decisions (Henman, 2006, p. 6).
Sulk-cost decision making trap can have severe effect on an organization. By trying to justify previous decisions, decision makers can increase negative effect of previous decisions rather than seek corrective measures. According to Keeney, Hammond and Raiffa, the organizational culture can promote this tendency (Hammond, Keeney & Raiffa, 1998, p. 9).
They give an example of corporate culture that punishes individuals for unfavorable decisions. In order to avoid the punishment, decision makers may tend to make decisions that justify previous decisions even if the previous decisions were wrong.
According to Henman, senior leaders in an organization can minimize the tendency for sulk-cost decision making trap (Henman, 2006, p. 7). Leaders should create an environment that allows free discussion and admission of previous mistakes. In addition, organizations should avoid penalizing individual unnecessarily.
Framing trap is another decision making trap that is associated with most mistakes in decision making. The two articles however address framing trap differently. Keeney et al, view framing a decision as a source of decision making trap while Henman considers failure to frame a decision as a source of decision making trap. According to Keeney et al, framing a decision limits decision makers from considering various options to a decision (Hammond, Keeney & Raiffa, 1998, p. 6). However, according to Henman, failure to frame can lead to a decision maker making decisions that are beyond the scope of decision issues.
Decisions in organization affect the organization rather than the individual who makes the decision. As an organizational issue, any decision in the organization should be in line with the organization’s vision and mission. To ensure this, individual decision should be minimized while group decision is emphasized.
Although group decisions can be affected by decision traps, the many individuals involved help to minimize the occurrence of errors. Since decision traps can lead to high cost to an organization, individual decisions should be left only to emergency. With advancement in technology, computer programs can be used in decision making and reduce occurrence of human errors in decision making.
The authors propose various solutions to particular decision traps, however, the overall solution lie in training and experience (Gunther, 2003, p. 67). The individuals that are frequently involved in decision making should be trained on decision making process. In addition, there should be enough consultation before major decisions are made.
An organization cannot run without decision making. However, the value of decisions made is compromised by various issues. Decision making traps influence the way decisions are made. Making decisions by intuition can led to major mistakes that can have severe effect to an organization.
Individuals involved in decision making should make sure that the decisions they make are the best in a particular situation. As Keeney et al advise being aware of possible decision traps can help avoid falling in the traps. Being better decision makers entails accepting that we are not infallible and engage others in the decisions.
The solutions proposed by Henman can help an individual to be a better decision maker and avoid errors in decision making. The two articles address decision making traps in details. Although the articles differ in their approaches, they address similar issues. Information from these articles is vital to improving decision making.
Bell, D., Raiffa, H. & Twersky, A. (1988). Decision making: descriptive, normative, and prescriptive interactions. Massachusetts: Cambridge University Press.
Drucker, P. (2001). Harvard business review on decision making. London: Harvard Business Press.
Gunther, R. (2003). The Truth about Making Smart Decisions. New York: Pearson Education.
Hammond, J., Keeney, R. & Raiffa, H. (1998). The Hidden Traps in Decision Making.
Harvard Business Review.
Henman, D. (2006). How to Avoid the Hidden Traps of Decision Making. Henman Performance Group.
Russo, J. & Schoemaker, P. (1990). Decision traps: ten barriers to brilliant decision-making and how to overcome them. London: Simon & Schuster.
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