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The hidden traps in decision making

Publication ,  Journal Article
Hammond, JS; Keeney, RL; Raiffa, H
Published in: Harvard Business Review
January 1, 2006

Bad decisions can often be traced back to the way the decisions were made-the alternatives were not clearly defined, the right information was not collected, the costs and benefits were not accurately weighed. But sometimes the fault lies not in the decision-making process but rather in the mind of the decision maker. The way the human brain works can sabotage the choices we make. In this article, first published in 1998, John Hammond, Ralph Keeney, and Howard Raiffa examine eight psychological traps that can affect the way we make business decisions. The anchoring trap leads us to give disproportionate weight to the first information we receive. The status-quo trap biases us toward maintaining the current situation-even when better alternatives exist. The sunk-cost trap inclines us to perpetuate the mistakes of the past. The confirming-evidence trap leads us to seek out information supporting an existing predilection and to discount opposing information. The framing trap occurs when we misstate a problem, undermining the entire decision-making process. The over-confidence trap makes us overestimate the accuracy of our forecasts. The prudence trap leads us to be overcautious when we make estimates about uncertain events. And the recallability trap prompts us to give undue weight to recent, dramatic events. The best way to avoid all the traps is awareness-forewarned is forearmed. But executives can also take other simple steps to protect themselves and their organizations from these mental lapses. The authors describe what managers can do to ensure that their important business decisions are sound and reliable.

Duke Scholars

Published In

Harvard Business Review

ISSN

0017-8012

Publication Date

January 1, 2006

Volume

84

Issue

1

Related Subject Headings

  • 3507 Strategy, management and organisational behaviour
  • 1505 Marketing
  • 1503 Business and Management
 

Citation

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MLA
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Hammond, J. S., Keeney, R. L., & Raiffa, H. (2006). The hidden traps in decision making. Harvard Business Review, 84(1).
Hammond, J. S., R. L. Keeney, and H. Raiffa. “The hidden traps in decision making.” Harvard Business Review 84, no. 1 (January 1, 2006).
Hammond JS, Keeney RL, Raiffa H. The hidden traps in decision making. Harvard Business Review. 2006 Jan 1;84(1).
Hammond, J. S., et al. “The hidden traps in decision making.” Harvard Business Review, vol. 84, no. 1, Jan. 2006.
Hammond JS, Keeney RL, Raiffa H. The hidden traps in decision making. Harvard Business Review. 2006 Jan 1;84(1).
Journal cover image

Published In

Harvard Business Review

ISSN

0017-8012

Publication Date

January 1, 2006

Volume

84

Issue

1

Related Subject Headings

  • 3507 Strategy, management and organisational behaviour
  • 1505 Marketing
  • 1503 Business and Management