Decision-making is a tough process. We are constantly making decisions, big and small, and sometimes we make the wrong ones. Why is it that we sometimes make bad decisions?
There are many reasons why we make bad decisions. Sometimes, it’s because we are rushed or stressed. Other times, we need to have all the necessary information. And sometimes, we just let our emotions get the best of us.
Whatever the reason, there are steps you can take to avoid making bad decisions. Being more mindful of your decision-making process can set you up for success.
Here are four tips on how to stop making bad decisions:
1) Take your time
2) Get all the facts
3) Consider your options
4) Listen to your gut
The psychology of bad decision making
The sunk cost fallacy
The sunk cost fallacy is a cognitive bias that causes us to irrationally continue investing in something as long as we have invested so much in the past, regardless of whether it is rational. In other words, we are more likely to persevere with something if we feel like we have put a lot of time, effort, or money into it, even if it would be more logical to cut our losses and move on.
We often mistakenly believe that because we have invested so much in something in the past, we must continue doing so to avoid wasted effort or losses. This fallacy is one of the most common ways people make bad decisions. It can lead us to stay in dysfunctional relationships, persist with failing business ventures or stick with sub-optimal investment strategies. However, this way of thinking needs to pay attention to the opportunity cost of continuing to invest in something that needs to be fixed and can lead us to throw good money after bad.
If you find yourself stuck in a situation where you feel like you have too invested in giving up, take a step back and try to assess the situation objectively. Consider the opportunity cost of continuing down the same path and ask yourself if there is any realistic chance of turning things around. If not, cut your losses and move on!
Confirmation bias is the tendency to search for, interpret, favor, and remember information in a way that confirms or supports one’s prior beliefs or values. It is a cognitive bias and a systematic error of inductive reasoning. People display this bias when prioritizing the information that confirms their beliefs or hypotheses.
The framing effect
One important reason why people make bad decisions is the so-called framing effect. This is when people make decisions based on how a problem is presented to them rather than the actual content of the problem.
For example, in one study, people were asked if they would donate money to a fund to help sick children. Some people were told that the fund would be used to provide treatment for a specific child, while others were told that the fund would be used to provide treatment for multiple children.
The researchers found that more people were willing to donate money when told that the fund would be used to help a specific child, even though the amount of money being donated was the same in both cases.
This is an example of how the framing effect can lead people to make different decisions, even when all relevant information is the same. The framing effect is a well-established phenomenon in psychology and can significantly impact our decision-making.
How to avoid bad decision making
When you make a bad decision, it can lead to a lot of negative consequences. It can affect your personal life, your professional life, and even your relationships. So, how do you avoid making bad decisions?
Be aware of your biases
Most people tend to bias their decisions according to their preexisting beliefs, which can lead to bad decision-making. To avoid this, it’s important to be aware of your biases and try to account for them when making decisions.
There are many different types of biases that can influence your decision-making, including confirmation bias (seeking out information that reinforces your existing beliefs), self-serving bias (tending to see yourself in a positive light), and groupthink ( succumbing to pressure from others to conform).
Avoid letting your biases distort your judgment, such as considering evidence that goes against your initial beliefs, soliciting input from others with different backgrounds or viewpoints, and taking the time to thoroughly think through all possible options before making a decision.
Take your time
Think about the last bad decision you made. What caused you to make that choice? Was it a spur-of-the-moment decision, or did you take your time to weigh your options?
If you make bad decisions regularly, it might be because you need to take the time to think things through, whether choosing what to eat for lunch or deciding which job offer to accept; rushing into a decision can lead to regret later.
Here are four tips to help you avoid making bad decisions:
- Give yourself time to think things through.
- Get input from others before making a decision.
- Weigh the pros and cons of each option.
- Trust your gut instinct.
- Get a second opinion.
- When you’re about to make a big decision, it’s important to get a second opinion. Talk to somebody who you know is level-headed and who will give it to you straight. This could be a friend, family member, or even a professional.
The person you talk to must be somebody you trust and who has your best interests at heart. They should also be unbiased and objective. This can be challenging to find, but it’s worth it to take the time to find somebody who meets these criteria.
Once you have found somebody to talk to, explain your decision and why you are considering it. Then, listen to their opinion. They may raise some valid concerns that you have yet to consider. Or, they may give you the green light to go ahead with your plans.
Either way, getting a second opinion is always a good idea before making a big decision. It can help you avoid making a mistake you might regret later on.