29 Decision Making Mistakes You Are Making (And Don’t Even Know It)

Decision Making Mistakes - boy hands in faceYou constantly make decisions, and the decisions you make determine your life, your success, and your future.

There’s a problem though.

There’s a good chance you are making mistakes without even realizing it.

Decision making, the process, and the errors you make are not often taught in schools or even at home. And, because of that, there are common errors that you, and the people around you, could be making.

Don’t fret.

In this article, we will go over 29 common mistakes people make when it comes to decision making. Examine the list, see if you see yourself making any of them, and work on avoiding them in the future.

The first step of fixing it is awareness, so here we go.

 

 

1. We base the goodness of a decision based on the result, not the process used to make the decision

This also called “resulting” or “outcome bias”.

It’s so easy to look at a situation, a decision, and call it good or bad based on the result. It turned out bad, so obviously it was a bad decision. It turned out good, so it must have been a smart decision.

That’s wrong. Here’s why:

As Annie Duke says in Thinking in Bets, decisions are like poker: it’s all probability. In the vast majority of decisions, we don’t know 100% of what the outcome will be. It’s a guess, a bet.

In poker, even the worse hands win – sometimes. That doesn’t mean it’s a good decision to play those hands.

And the best hands lose sometimes as well. You may make a good call, place a good bet, and still lose. It doesn’t make the decision bad.

Even if something has a 98% chance to happen, 2 out of every 100 times it won’t.

So in your life, don’t base the goodness of a decision on the outcome – base it on the process and the criteria used to make that decision.

And if you make a good decision and the result is poor, don’t beat yourself up. It was a good decision that just turned out poorly that time.

It’s easy to look back and think “I should have known this or that”. Hindsight is 20/20. Don’t fall prey to that either.

 

2. We rush into making decisions without taking the time we need to analyze it

One common error is that people rush into a decision. There are a couple of problems with that.

First, when you rush to make a decision, you may make a decision on the wrong problem. If you don’t take time to examine what you are trying to solve or resolve, you may make a decision based on the wrong issue and take yourself in the wrong direction.

Also, when you rush, you often don’t take time to look at alternatives. While you don’t want to overwhelm yourself with alternatives,  adding just a couple can greatly improve your decision making.

 

3. We get a narrow focus

Often, when making a decision, we get caught in a narrow focus.

Should I buy this or not? Should I do this or that? This one or that one?

When we do that, we limit ourselves. We focus on the trees instead of the forest and we miss other alternatives or options that could be much better.

Instead of this or that, could it be this and that? Instead of buying this or not or this or that, is there something else you could buy with the money or could you save it?

Making yourself look for other alternatives can broaden your scope and make a better decision.

 

4. We keep investing time and money int0 something that is failing (sunk costs)

This happens all the time with individuals and business.

You invest time and money into something, it’s not turning out the way you want, but because you have invested so much time and money, you keep investing more hoping it turns out better.

A business may invest millions in a project, only to have it not turn out well. Instead of cutting losses, too often they keep putting money in hoping it will turn around.

You may invest time in a relationship. It’s not good, but you’ve already put two years of life into the relationship, so you hold on hoping it will get better.

Why do we do that? Because we have an aversion to loss. When we cut ties, cut it loose, we think we are “losing” the time or money we invested. It’s also admitting that we failed.

And we don’t like that.

However, we have to see things as spent already. You can’t get that time or money back. Hanging on often makes you lose more.

So instead, ask the question: “If I was starting over today with the situation as it is, knowing what I know now, would I start/invest in this relationship/project/hobby, etc?” If no, then cut it loose.

 

5. We hate closing doors

We like to leave our options open. We want to be able to go back to a relationship or a job or a project or whatever.

When we close a door, we feel like we could potentially lose something or miss out.

The problem is, when we don’t make a decision, close a door, and move forward, we can’t move forward.

If you can’t close a door on a past relationship, it’s hard to move forward with a new one. If you can’t close a door on what house to buy, you’ll never own one.

As Barry Schwartz said in The Paradox of Choice, when we leave doors open, it makes our choices, what we do, less satisfying. He gave the example that people who couldn’t return items to a store were more satisfied than those who could.

Be willing to make a decision, close doors and move forward.

 

6. We chase after the best – to a fault

It’s good to pursue excellence; however, there comes a point when chasing after the “best” can hurt us.

Barry Schwartz calls it maximizing. We can get caught in this mode where we have to have the best. We research and look and look to make sure what we buy or get is absolutely the best.

The problem with this is that people who do this are less satisfied with what they get. There’s always the fear of something better out there, and if they see it, they aren’t happy with what they got.

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Instead, Schwartz recommends doing this: know what you want, the criteria, find something that is good enough, that meets it, buy it, and don’t look back.

People who do that are much more happy and satisfied with what they have.

 

7.      We keep looking to see if something better is out there that we missed out on

This is related to #6. If we are always looking for “the best”, making sure we get the “best”, we will never be satisfied with what we did get.

It can be easy, when you buy something or get a new job, to be looking to see if there was a better price or a better position we could have gotten.

This is detrimental to us.

When we do that, we aren’t satisfied with what we have and begin to live in regret.

Don’t do this. Instead, as said in #6, find something that matches what you look for, take or buy it, and stop looking.

And live with gratitude. Instead of focusing on what you don’t have or better stuff out there, be thankful for what you have.

 

8. We don’t give ourselves other alternatives

One huge mistake we often make with decision making is that we don’t give ourselves other alternatives.

It’s easy for us to get caught up in a narrow focus on what’s in front of us and not look around for other options. We also may initially like an option, so we don’t take time to look at other options (to our detriment).

In their book, Decisive, Chip and Dan Heath said that when a business adds just a couple more options to what they are deciding on, the decisions often turn out much better.

In your personal life, when making a decision, just add a couple of options and see how it helps with your decisions.

 

9.      We give ourselves too many options

Who’s going to sell more jam? The store with 50 jam varieties or the one with 6?

Everyone likes to look at the shop that has 50 varieties of jam. However, when it comes to actually buying jam, it’s the shop that has just a few options that gets the most sales.

Why?

Because too many choices can overwhelm us, especially when we are not experts or knowledgeable about the topic.

We can get analysis paralysis, decisions require more effort, and mistakes are more likely to be made.

Also, too many options bring less satisfaction to our decision. If we have to choose between 20 options, when we pick one, we wonder if we are missing out on something better more than if we had to pick between just a few options.

Schwartz in The Paradox of Choice says it also turns us from choosers to pickers. With so many options, instead of thinking actively about the possibilities, we just grab and hope for the best.

Having options is good for a decision, but limit the number – too much and it hurts you as well.

 

10. We fall in love with our first choice

We sometimes have a tendency to see our first option, fall in love with it, then find reasons against everything else.

Don’t do that.

Because it’s the first doesn’t mean it’s the best. Take time to truly analyze each option without bias toward one are another.

How does it match the criteria for your decision compared to others?

 

11. We give greater weight to evidence that confirms us and dismiss evidence that goes against us

In whatever decision we are making, we tend to look for evidence that confirms the choice or decision we want.

If we want to buy a certain house, we look for everything about the house we like and dismiss possible negatives. We rationalize them out.

For the houses we don’t want or that aren’t the one we “picked”, we focus on the negatives and dismiss the positives about them.

It’s the same with politics, business decisions, and so on.

Be careful of confirmation bias. Make sure you are analyzing your options based on a set criterion evenly, not giving greater weight to evidence based on an inclination.

 

12. We dismiss evidence based on how we like the source

Now, I don’t mean we just trust any source, no matter the credibility. That’s not what this means.

However, we have a tendency to dismiss information that could be useful for a decision based on whether we like where the information is coming from.

We may not like a certain person, so when they give us feedback, we ignore it, no matter how accurate the information is.

Instead, we need to give all the information the same vetting and weight based on it, no matter if we like the source or not.

 

13. We get comfortable in the status-quo

It’s easy to want to stay in the status quo. It’s comfortable, takes less work, and it is less risky.

When we step out of the status quo, there’s risk. There’s the possibility of failure. There’s the possibility of people’s negative opinion.

And, truth is, sometimes it’s just downright uncomfortable.

But, if you really want to move forward, it is often necessary.

Many people never move forward with decisions, or life, because they aren’t willing to step out of the status quo.

Businesses fail because they stick with the status quo instead of changing when they need to.

Don’t let that be you.

 

14. We live in past decisions

When you are constantly focused on the past, it’s hard to live in the present or the future.

If you are constantly looking back to past decisions, the mistakes made, and living in regret, you can’t move forward.

Mistakes happen. Failures happen. It’s not the mistakes or failures that matter, but what you do with them.

If you keep making decisions looking back, fearful of failing again or making another mistake, you likely won’t make good decisions.

Examine them, learn from it, then look forward and keep moving.

 

15. We are overly optimistic and overconfident

I, and many other entrepreneurs, can often be the poster child for this. We know that many businesses fail. We know and hear the percentages.

But if you ask many entrepreneurs – those statistics don’t apply to them. They, we, are optimistic and believe they will succeed, no matter the odds.

READ  Book Summary: Decisive - How to Make Better Choices in Life and Work

Don’t get me wrong, optimism can be good. You have to believe you will succeed.

However, you have to look at the base rates, the statistics too. If 80% of a business type fails, then you have a 20% chance of success. Just because you are optimistic doesn’t put you in the 20%.

Instead, know the rates and learn from them. What is different about the 20%? What steps can you do to “beat the odds”?

Overconfidence

In the same note, we, as humans, or terrible at predictions. Being an expert doesn’t make you better at them – it can sometimes make you worse.

We don’t know the future. We can’t. The best we can do is look at past events and stats and build off that. Predicting an outcome based on some outside knowledge beyond that is likely going to just get you into trouble.

 

16. We overestimate the importance of what is right in front of us

Things always seem bigger up close. When we face a problem, it seems huge.

But, when you look at it 5 years, or even a month, from now, in perspective, it’s not that big.

Take having a flat tire in the rain. It stinks. It’s annoying. At the moment, it’s big. But, when in the perspective of life, looking back on in a few weeks or months, it’s not that big at all.

Sometimes we give greater weight to information because it’s right in front of us – such as the safety of flying on an airplane when a crash happens.

Sometimes we are overconcerned about the consequences of a decision – such as asking someone out or for a dance. At the moment, it seems huge, but in 10 minutes, 10 months, and so on from now, it’s not a big deal.

 

17. We put too much trust into authorities and “experts”

We like to think that because someone is an authority or expert, we can just trust them.

Truth is, sometimes it’s just easier to let an authority or expert make a decision than have to analyze and think ourselves.

That can be dangerous.

When it comes to confirmation bias and blind spots, experts can sometimes have it worse. The more they know, the smarter they are, the easier it is to create narratives to rationalize what they believe.

And when it comes to predictions for the future, their predictions are about as good as if we made them ourselves.

Now, I’m not saying we dismiss authorities and experts. It’s good to get their input. In some cases, especially in a topic we know nothing about and don’t have the time to study it ourselves, having them help us make a decision can be helpful and is needed.

However, if we just let them decide, we may find that what they decide doesn’t really match the criteria, risk tolerance, and so on of what we are looking for.

Be careful about blind trust in an authority or expert and their decision.

 

18. We don’t seek disagreement

One of the biggest causes of poor decision making is that we don’t seek (or accept) disagreement about our favored option.

It may be that we fell in love with one option, and we don’t want anyone else to tell us it’s not the best.

Or it could be that we equate our opinion as a part of ourselves and any attack on our choice is an attack on us.

The problem is, disagreement and dissent bring about better decisions. It allows us to vet our choices better. It lets us see potential downfalls where, even if we still make that choice, we can prepare for potential outcomes that are negative that we may not have seen previously.

So many businesses have made bad decisions because no one was willing to stand up and say “I think it’s a bad idea because…”

Be willing to be a person who accepts (and encourages) disagreement. In fact, look for it. If no one is around saying why it may not work, you may need to look harder.

When making a decision by yourself, you may need to play as your own devil’s advocate. Ask yourself what someone would argue against you. How would you argue against someone else making that decision? If you couldn’t make that choice, if it wasn’t an option, what other choices would you make?

 

19. We put off the decisions needlessly

Maybe you are stuck in analysis paralysis. Or maybe you are afraid to make a decision because you then commit to something, take a risk, and fail to be wrong.

Whatever the reason, it can be easy to put off decisions. But there’s a problem with that.

There’s also a cost of NOT making a decision – and often it’s worse than the choice we would have made.

It also closes doors and other options. If you wait too long to decide where to stay for your vacation, everything might be sold out.

It’s good to get information to make a wise decision, but once you have enough, decide. If you aren’t sure if you have enough, you can also look and see what the cost is of getting more information versus deciding.

 

20. We don’t identify our key objectives

The key objectives are the criteria you use to make a decision. The problem is, we often don’t take the time to decide what our criteria are!

Without set criteria, you will judge each alternative differently and can easily give more weight to some criteria that you shouldn’t.

For example, if you don’t have any set criteria when buying a house, you may find a house with a nice kitchen, which could be great, so you dismiss the house that would fit your needs better because it doesn’t have as nice of a kitchen. If you had set your criteria up beforehand, you would have known what is most important to you and could have judged the houses more objectively.

Make sure to take the time to decide the key objectives, the criteria, for your decision.

 

21. We don’t examine the possible consequences of our choices (or alternatives)

Sometimes we don’t take the time to examine the possible consequences of our choices. We make a decision in hopes of one outcome, but other possible outcomes or side consequences could happen.

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If we examine the possible consequences and outcomes, we then can prepare for them and mitigate possible negatives that could happen.

 

22. We subconsciously decide what we want before figuring out why we want it

Sometimes when a choice arises, we decide that we want something before really figuring out the reason why.

In some situations, that may not necessarily bad, such as if you are picking out jam or a piece of art, you don’t always have to have a logical reason why you like it – you just do.

At the same time, doing this can hurt us. When we quickly decide on what we want, we then spend our time confirming our choice versus objectively examining alternatives. When we do that, we can end up with a choice we will later regret.

 

23. We give disproportional weight to the first piece(s) of information we get

It’s just the way our brain works. We give more weight to the first information we get and then compare other information to it.

It’s called anchoring. An example is pricing.

If you first see a product at a certain price, that’s the price you are going to compare it against. People who move from one city to the next often keep the same price range of what they think a house should be – often leading to a much smaller or bigger house, depending on if they went from a more to a less expensive city, or vice versa.

In negotiation, the first person who puts out a price sets the anchor, and unless that anchor changes, the price is negotiated based on the initial price.

When it comes to you, awareness is key. Ask why you think a product should cost X or why it’s a certain way. Challenge your anchors.

 

24. We fear other’s opinions

Sometimes you may make a bad decision because you fear what others may think. You may want to go one way, but you are afraid of how others may respond, so you choose a different route.

Or you do something because you think other’s might like it.

That’s a recipe for bad decisions and a missed out life. Don’t base your life decisions based on others’  negative opinions. Anything worth while will always have critics.

This doesn’t mean you shouldn’t listen to others who are trying to help – you should – sometimes. But you shouldn’t live out of fear of their opinion either.

 

25. We make decisions based on the way we wish things were

You see this in business. Competitors have come in with better products. Or the need for a product diminishes.

The business leaders, however, deny reality. They don’t want to believe it. So they keep making decisions as if everything is okay.

People do that in relationships. They wish the other was better, nicer, was the person they want, so they pretend they are and make decisions based off of it.

It’s good to know where you wish things were, but you have to live in reality and base your decisions off of reality, not the way you wish things were.

 

26. We assume others are taking action based on information

Have you ever gone to someplace new and followed what the other cars were doing, assuming that they knew what they were doing?

Sometimes, we assume because a herd of people is doing it, that they have a logical reason for doing it.

Unfortunately, that’s often not true.

There have been accidents caused by people turning from one lane to the next – not because someone was there, but because everyone followed suit. One car turned to the next lane, so the car behind followed, so the car behind followed, all assuming the person is moving for a certain reason.

And they weren’t, they just changed lanes.

It’s good to examine what groups of people are doing, but don’t assume that they are doing it for a logical reason – find the logical reason first before following suit.

 

27. We fall prey to scarcity

We have a tendency to believe that because something is scarce, it’s valuable. We sometimes have a fear of missing out.

There’s a reason stores put “limited supply” or “Only X left”. It makes us feel others find it valuable, that the product is scarce, and it urges us to buy.

It’s the same with a time limit. We are more likely to purchase if time is about to run out and we won’t have the opportunity to buy anymore.

Be aware of these tendencies. Ask yourself why you want X product or if you really need it. Ask if you are wanting to get it because you need it or because it’s getting “scarce”.

 

28. We fall prey to “free”

There is a huge difference between a reduction from $.02 to $.01, and $.01 to $.00. Free has an amazing allure on us.

In fact, studies have shown that we can act quite irrational just because something is free.

We may buy something to get something “free”. We may get something that doesn’t fit our needs as well or that we don’t really want just because it’s free.

Be careful with free and make sure you are getting something because it’s what fits your needs best, not just because the word “free” is attached to it somehow.

 

29. We are overcautious with our estimations and decisions

It’s called the prudence trap. We give “extra padding” to our possibilities and estimates “just to be safe”.

The problem is, that can lead to poor decisions. If you pad your numbers, it will paint a picture that’s not reality.

And if you make a decision on a false reality, you may make a decision that is subpar to what you could have or that will cost your time, money, or more.

 

Conclusion

Did you see yourself in any of these mistakes?

That’s okay. Don’t beat yourself up, just learn from it and do better next time.

Now that you are aware of those mistakes (and the others), you can work to avoid them in the future.

Let me know in the comments below: What mistake do you catch yourself doing? Are there any you think I missed?

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