Decision-making might be seen as an effortless process for most people. But scientists who investigate management, pay attention to these psychological points.
Everyone makes decisions in his (her) daily life. Deciding is one of our daily routines.
Every day we encounter questions such as ‘Which market to go to?’, And ‘wearing a black or white skirt?’ and make decisions. Of course, we do not need a deep analysis to answer these questions.
However, there are times in our lives when we are at a crossroads. We must make decisions that will have a serious impact on our lives. In some cases, we are happy because of the decisions we make, but in others, we feel remorse. Have you ever wondered why you made wrong decisions at important times in your life? Probably the answer is yes. There is not much left to change after the decisions have been made and the positive or negative results have been achieved. At times, every person has thought about going back to the past and correcting those mistakes after making wrong decisions.
But how can we make sure that our decisions are not wrong?
scientists who investigate management, pay attention to these psychological points. The issues about why people make a wrong decisions were investigated. They clarified that there are common mistakes during decision-making processes. Reading this article, you will see that you also make the same mistakes from time to time.
Making correct decisions depends on proper analysis of the information and accurate conclusions. But some psychological aspects deprive people of the ability to analyse correctly.
People usually make the following mistakes in the decision-making process:
If a person is thinking that he (she) knows a lot and has too much confidence about his (her) abilities, then an “Extreme confidence” mistake appears.
Decisions with fast results are much more attractive for this kind of people. That’s why they often make mistakes.
Rooting to one information and eliminating other information is called as anchor effect. The weight of the first idea, impression and prices in these situations is more than the weight of the following information. In these situations
If a decision-maker is not able to analyse the processes unbiased, then he (she) makes a mistake called a selective approach. The information that he (she) pays attention to affects the problem and alternatives they nominate.
Ratifying the approaches according to previous information or Choices of the person who is unable to evaluate processes objectively is a Confirmation mistake. These people accept the information which formatted their opinion before. They do not want to believe the information that analyzes critically their opinion. And they make Confirmation mistake.
Framing mistake causes when a decision-maker emphasize some aspects of the process and put the other aspects out of attention. They focus on special aspects of the situation and ignore the other points. Thus, they change their view by mistake and make decisions according to false analysis.
Mistake of compliance
This mistake is about the last incident or event which remains in memory. Decision-maker tries to remember the last cases and the results and make a decision. As a result, he (she) loses the ability to analyze the situation and make a mistake.
Mistake of representation
In the case of linking the occurrence of one situation to another, he makes the mistake of representation. In this situation, the decision-maker makes analogies and tries to see “similar” and non-existence situations.
Mistake of casualty
This mistake happens when a decision-maker tries to find special meaning in casual processes. Although such accidents happen random, there’s no way to predict those accidents, he (she) believes that the process didn’t happen by accident.
Mistake of sunk costs
This mistake usually occurs during business processes. A decision-maker tries to change the past and recover sunk costs. The person who forgot that it is not possible to change the past makes a mistake of sunk costs. Trying to recover the sunk investment of the business in the past is an example of this. Even if the new decision is correct, it is not able to correct the mistake made before. Correct decisions can make a new profit in the future, but not recover past sunk costs.
Proper analyses of the situation and information is good insurance against making mistakes.
Different managers use different methods and procedures for correct analysis. The most popular analysis is SWOT. The abbreviature of SWOT stands for Strongness, Weakness, Opportunity, and Threats. In this method, managers compare the strong and weak sides of the decision. They also check the opportunity and threats.
If you want to know what methods and tools are needed to avoid mistakes in the decision-making process, continue following our blog. Our next post will be about the tools and methods used during the decision-making process.