Error tendencies, Part 2: Decision Making

Plunging in (Russo, ch. 1)

Beginning to gather information and reach conclusions without thinking the issue through or thinking about how the decision should be made.

Frame blindness (Russo, ch. 2).

Tendency to solve the wrong problem because your mental framework prevents you from seeing the best options and important objectives.

Inconsistent weighting of costs (Russo, ch. 2)

Tendency to understand costs and losses differently in different situations, even when the costs and losses should be the same.

Sunk costs (Russo, ch. 2)

Tendency to make decisions on the basis of past investment rather than expected future value.

Framing losses as more important than gains (Russo, ch. 2)

Tendency to become risk seeking in order to avoid losses.

Bad metaphors or analogies (Russo, ch. 2)

Tendency to frame a decision using metaphors or analogies that give a misleading understanding of the problem situation.

Lack of frame control (Russo, ch. 3)

Tendency to define the problem in only one way or to be unduly influenced by the frames of others.

Overconfidence in judgment (Russo, ch. 4)

Tendency to be too sure of assumptions and opinions, leading to decisions made without collecting key information.

Shortsighted shortcuts (Russo, ch. 4, 5)

Tendency to make decisions based on information acquired through lazy thinking strategies such as availability, anchoring, and confirmation bias.

Shooting from the hip (Russo, ch. 6).

Tendency to make decisions intuitively based on information in your head rather than following a systematic procedure for choosing such as a subjective linear model.

Group failure (Russo, ch. 7).

Tendency to assume that groups will make good choices automatically and to fail to manage the group decision-making process in ways that will produce better decisions.

Fooling yourself about feedback (Russo, ch. 8)

Tendency to fail to learn from experience because of motivated inference or hindsight bias.

Not keeping track (Russo, ch. 9)

Tendency not to keep systematic records that would make it possible to learn from past decisions.

Failure to audit your decision process (Russo, ch. 10)

Tendency not to monitor your decision making in an organized fashion that would identify errors.

Additional error tendencies not in Russo:

(from Max Bazerman, Judgment in Managerial Decision Making)

Negotiation error tendencies:

Mythical fixed pie.

Tendency in negotiation to assume that your interests completely conflict with the other party's interests.

Framing in negotiation.

Tendency to distort negotiation by framing in terms of gains and losses.

Nonrational escalation of conflict.

Tendency to make increasingly extreme demands on the other party rather than seeking a settlement.

Negotiator overconfidence.

Tendency to overestimate the strength of your own negotiating position.

Neglecting the cognitions of others.

Tendency to focus on your own interests and forget about the interests and plans of the other party.

Social error tendencies

Neglecting fairness:

Tendency to ignore issues of fairness and concern for others.

Winner's curse:

Tendency in competitive bidding for the winner to pay too high a price.

Risky shift:

Tendency for individuals in groups to produce riskier decisions than would the individuals alone.

Tragedy of the commons:

Tendency for pursuit of individual goals to lead to depletion of shared resources.

Failure to cooperate:

Tendency to maximize individual interests instead of cooperating with others.

Updated March 24, 2003

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