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Avoiding Bad Decisions

Written by: fs
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Here are five of the biggest reasons we make bad decisions.

1. We’re unintentionally stupid

We like to think that we can rationally process information like a computer, but we can’t. Cognitive biases explain why we made a bad decision but rarely help us avoid them in the first place. It’s better to focus on these warning signs that signal something is about to go wrong.

Warning signs you’re about to unintentionally do something stupid:

  • You’re tired, emotional, in a rush, or distracted.
  • You’re operating in a group or working with an authority figure.

The rule: Never make important decisions when you’re tired, emotional, distracted, or in a rush.

2. We solve the wrong problem

The first person to state the problem rarely has the best insight into the problem. Once a problem is thrown out on the table, however, our type-A problem-solving nature kicks in and forgets to first ask if we’re solving the right problem.

Warning signs you’re solving the wrong problem:

  • You let someone else define the problem for you.
  • You’re far away from the problem.
  • You’re thinking about the problem at only one level or through a narrow lens.

The rule: Never let anyone define the problem for you.

3. We use incorrect or insufficient information

We like to believe that people tell us the truth. We like to believe the people we talk to understand what they are talking about. We like to believe that we have all the information.

Warning signs you have incorrect or insufficient information:

  • You’re speaking to someone who spoke to someone who spoke to someone. Someone will get in trouble when the truth comes out.
  • You’re reading about it in the news.

The rule: Seek out information from someone as close to the source as possible, because they’ve earned their knowledge and have an understanding that you don’t. When information is filtered (and it often is), first consider the incentives involved and then think of the proximity to earned knowledge.

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