Perception, Decision Making and Problem Solving - Decision Traps
3 important questions on Perception, Decision Making and Problem Solving - Decision Traps
What are three major decision making traps?
(1) Hindsight bias
(2) Overconfidence bias (Hubris)
(3) Escalation of conflict
(2) Overconfidence bias (Hubris)
(3) Escalation of conflict
What is Overconfidence bias?
Overconfidence bias is an inflated confidence in how accurate a person’s knowledge or estimates are. Those higher in the organizational hierarchy feel more empowered and overestimate their ability to accurately forecast the future. Hiring experts to assist with making decisions may not be the answer either, because experts sometimes fail to make accurate predictions.
When does an escalation of commitment occur?
Escalation of commitment occurs when individuals continue a failing course of action after receiving feedback that shows it isn’t working. In effect, they try to turn the situation around by investing more after a setback.
- This occurs because of self-justification
- The need to demonstrate that one’s actions are rational.
- risk perceptions (prospect theory)
- group decision-making dysfunctions,
- an organization’s tendency to avoid change
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