Decision Making – Litemind Exploring ways to use our minds efficiently. Mon, 01 Jan 2018 20:43:29 +0000 en-US hourly 1 How to Make Great Decisions in Life: Top 5 Practical Insights Mon, 01 Nov 2010 11:40:43 +0000 Making great decisions can be tricky: there are many hidden traps and potential roadblocks you need to be aware of. Here are 5 practical, actionable insights to help you make the best possible decisions to improve your life. 1. Value is in the eye of the beholder How much is a gallon of water worth? […]

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How to Make Great Decisions in Life

Making great decisions can be tricky: there are many hidden traps and potential roadblocks you need to be aware of. Here are 5 practical, actionable insights to help you make the best possible decisions to improve your life.

1. Value is in the eye of the beholder

How much is a gallon of water worth?

Well, if you’re reading this, you can probably get a gallon of water for pennies from your kitchen tap. Yet, if you were dying of thirst in a desert, you’d happily pay a hundred bucks for it, right? On the other hand, you’d pay a hundred bucks an hour for a plumber to avoid the water being there in the first place (in your flooded basement, that is).

Many people believe value is intrinsic to an object. Sure, water is water is water, but its value varies enormously depending on what you need it for.

Decision making is a very personal business — it’s about assessing what’s valuable to you. There’s no absolute best job, best car or best life to be lived: value is in the eye of the decision maker.

How to Apply This Insight

  • Always decide on your own. Sure, factor in other people’s opinions, but bear in mind that they may value things (very) differently. Blindly following other people’s advice may lead to disastrous decisions — even if they are based on “sound” advice from people with the best intentions of helping you.

2. Know your goals before choosing

As we’ve seen in insight #1 above, no decision outcomes are intrinsically ‘good’ or ‘bad’ — the outcome depends on who you ask, and there are never absolute answers. How do you make sure you’re making the best decision for your life, then?

It may sound obvious at first, but it all boils down to your goalsknowing what you want out of the decision.

But establishing a clear picture of your goals for decision making is not always trivial, and I don’t think people invest enough time to do it properly. Consider this dialogue from the book Making Great Decisions in Business and in Life:

Salesman: Hey, want to buy an elephant for $800?
Passerby: No, thanks.
Salesman: How about an elephant for $500?
Passerby: No! What would I do with an elephant? Come on, I live in an apartment.
Salesman: You drive a hard bargain. How about two elephants for $500?
Passerby: Make it $400 and you’ve got a deal.

The point is clear: if you have no use for an elephant (or for the latest shiny gadget, if you will), it will never be a good deal now matter how little you pay for it (unless you plan to make a profit reselling it, of course).

How to Apply This Insight

  • Be clear about your goals before deciding. A great way to ensure you carefully consider your goals before deciding is by using the PrOACT approach, which is a great, structured way of making decisions.

  • Beware of doing the wrong comparisons. To assess how valuable something is to you, the only comparison you should make is how it ties in with your objectives. If you don’t need, say, that latest phone in the first place, it’s meaningless to compare it with the model you already have, or with its “light” or “premium” versions! For more on how comparisons can lead you astray, check The Relativity Mind Trap.

3. Your decision outcome can be no better than your best alternative

Many people see decision making as an analytical process that, if done right, is guaranteed to lead to nice outcomes. They believe that if they just think hard and long enough, great outcomes will result from their decisions.

The truth is: no matter how much effort you put in, no decision outcome can be better than the best alternative you considered. And no amount of analysis or systematic thinking will change that.

Having a good amount of alternatives to explore and choose from, then, is essential for making great decisions. If you’re having a hard time deciding, it doesn’t mean you’re a poor decision maker: most likely you’re just out of decent alternatives.

How to Apply This Insight

  • Generate many alternatives. Before jumping in and deciding among just two or three options that first come to mind, spend time generating plenty of new alternatives. Use idea-generation techniques, such as lists of 100 or SCAMPER. Set yourself idea quotas. Don’t be shy about flexing your brainstorming muscles.

4. Make effort proportional to importance

The more important a decision is, the more time you should spend on it. ‘Duh, that’s just common sense’, you say. Well, just like with many other things in life, common sense does not equal common practice.

Here’s what often happens: we spend time on decisions not based on how important they are, but on how difficult they are. These are two very different concepts. Let me illustrate.

Suppose you’re buying a car, and you’re torn between two very similar models: One has slightly better transmission, but the other has a slightly better engine. One is slightly cheaper, but the other is slightly more reliable. You see, it’s a decision that is hard to analyze, with many complex tradeoffs!

Yes, it sure is a hard decision… but that doesn’t mean it’s an important one! After all, you’re probably going to be fine with either car as the differences are minimal.

The closest your alternatives are, the harder it is to decide. And, perversely, the less relevant your decision will be one way or another!

As a wise decision-maker, you will realize that if alternatives are very close to each other in value, it matters less which one you picks. You should save your energy for more important decisions — those with very different payoffs.

How to Apply This Insight

  • Pay attention to “hard” decisions. When you can’t make up your mind between two choices, chances are that they’re so similar that it doesn’t matter which one you pick. See if the tradeoffs you’re considering match your decision objectives (see insight #2 above).
  • Agree on a decision deadline. If you still find yourself bogged down on a decision of borderline importance, set a fixed block of time aside and agree to have the decision made at the end of it no matter what. Can’t really make up your mind for such a minimal difference? Toss a coin at the last second if necessary.

5. Taking a structured approach makes a big difference

Making great decisions is a process that involves many unique and diametrically-opposite “thinking modes”. For instance, to generate good alternatives, you must be creative and non-judgmental. But to ultimately make up your mind, you need to be judgmental. Knowing when to switch thinking modes is important, and it’s too easy to get it wrong.

In that context, I strongly advise that you see the decision making process as a chain of separate steps. Isolate each step, going into different thinking modes in turn in order to make the best possible decision.

How to Apply This Insight


There you go. Here are the 5 insights that always help me make better decisions. What do you think about them? Do you have any additional ones that you try to keep in mind when making decisions? Share them in the comments!

(cc) Litemind, some rights reserved. Original post: How to Make Great Decisions in Life: Top 5 Practical Insights.

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The Relativity Mind Trap: How Comparisons Can Lead Us Astray Mon, 12 Apr 2010 11:54:27 +0000 Our minds make sense of the world by making comparisons. It’s human nature, but it can also lead us to think irrationally and make bad decisions. Learn how this mind trap works and how to escape it.

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How do you compare?

Our minds make sense of the world by making comparisons. For instance, how do you tell if something is cheap or expensive when shopping? It’s mostly by comparing it with other products, isn’t it? And so it happens for everything in our lives: we’re constantly comparing — everything, all the time.

It’s true that making comparisons is human nature, but judging everything only through comparisons can get us to think irrationally and make bad decisions. It eventually makes us feel miserable when we realize that our choices weren’t really that good, after all.

Learn how this mind trap works and how to escape it.

Relativity in Our Daily Lives: Pens and Suits

Picture yourself in the following situation: You have two errands to run today — buying a new pen and a new suit for work.

At an office supply store, you find a nice pen for $16. You are set to buy it, but you remember the exact same pen is on sale for only $1 on a closeout 15 minutes away. Do you buy the pen for $16 or go for the $1 one?

OK, on to your second errand: Let’s go get your suit. You just found a nice suit for $500 and while waiting for the cashier, another customer tells you that you can find the same suit for $485 on a store just 15 minutes away. Do you buy your suit for $500 or drive 15 minutes for the $485 one?

Take a moment to think about your choices. What would you have done?

A similar situation was presented to a group of people in a study (by Amos Tversky and Daniel Kahneman, the same brilliant guys from another great famous framing experiment). The results? They found that most people chose to drive to buy the cheaper pen, but happily parted with $500 for the more expensive suit.

What’s going on? Can you spot the contradiction here?

A Dollar is a Dollar is a Dollar — Or Is It?

Clearly, our minds are fooling us. In both situations your choice boils down to saving $15 or 15 minutes of your time: The absolute price of the item you’re buying has no importance whatsoever (and is the red herring used in the experiment to elicit the contradictory behavior the researchers were looking for).

Whether you save $15 from buying a pen, a suit, a car or a luxury yacht, the end result is the same: $15 in your pocket. The only question that matters here should be: “Is 15 minutes of my time to save $15 worth the $15 I’m saving?”

What’s happening here is that your mind can’t decide, without external aid, if a $15 discount is a good deal: it needs something else to compare the discount to (in this case, the total price of the item).

And this is the problem: we look at things in life relatively, comparing differences, instead of looking at each thing’s value on its own.

Making comparisons and evaluating things relative to each other is a many times a useful shortcut, but as demonstrated above, in many occasions it severely hinders our ability to make wise decisions.

Relativity Traps are Everywhere

Not surprisingly, relativity kicks in not only when buying pens and suits but in almost everything in life.

Relativity, along with the bad comparisons it entails, can make you feel bad about yourself, get you in debt, and lead you to make life-changing decisions that are just plain stupid. In short, it can make your life miserable.

The examples are countless; here are just a few.

  • Comparing yourself with others. This is a biggie. If you assess your worth by comparing yourself with others (in any dimension you choose to use), you’re set for disappointment: there will always be people better than you in any measure you pick. I’ll further explore this theme in a subsequent article, but for now it suffices to repeat something you already know: avoid comparing yourself with others; it’s always a no-win situation.

  • Keeping up the Joneses. The richest person in a poor neighborhood is usually happier about his net worth than the poorest person in a rich neighborhood — regardless of how much they actually have! In light of relativity, people compare themselves with their neighbors, and don’t like the feeling they’re behind “everyone else”. This is an endless cycle: the more people have, the higher they set the bar for the people they compare themselves with.

  • Winning (and feeling like you lost). Isn’t it true that the silver medal usually tastes bitterer than the bronze medal? Despite the absolute value of the medals, earning the silver medal usually comes in the context of failing to win the gold one. The bronze medal, on the other hand, is earned in the context of getting any medal instead of no medal at all.

  • Taking advantage of “great deals”. It’s a well-known sales technique to offer customers the most expensive products first. Those overpriced items establish the context for people to see the other products as being cheaper. Oftentimes those “cheap” products are not cheap at all, but thanks to relativity, you walk away thinking you made a great deal. (Note, though, that you paid the ‘absolute’ amount of money for your product! It may be relatively cheaper but you may have parted with a great deal of your hard-earned money, anyway.)

    On the flip side, people may go for the more expensive item because the difference in price to the less expensive one doesn’t look as big. People find it easy to spend $3,000 on leather seats for their new $25,000 cars (the $25,000 serves as the comparison number), but have a hard time spending the same amount on their living room sofas (that usually don’t have a clear figure to be used for comparison).

How to Overcome the Relativity Trap

Is it possible to escape the mind trap of relativity”? Dan Ariely, in his brilliant book Predictably Irrational (from which I got most of the inspiration to write this article) hints at the solution.

The way to escape thinking in terms of comparisons and relative terms, is — not surprisingly — thinking more in absolute terms: you got to escape the trap of doing local comparisons and think more broadly.

Going back to our example of buying the pen and the suit: Resist the temptation of looking at the $15 savings relatively to the item’s total price (the immediate, most salient comparison). Escape that local comparison and put the savings into a broader context instead. Ask yourself ‘What can I do with the $15 saved?‘ and see how that can better inform your choices.

Maybe you will buy a book? Save the money? Donate it to charity? Moreover, ask yourself: “Is $15 worth a drive downtown and 15 minutes of my time?” In short, see beyond the immediate situation.

In 15 minutes, maybe you can go back to work and earn more than $15? Or maybe a 15-minute break is what you need right now? Regardless of which way you decide, remember: this has nothing to do with the price of the pen or the suit, but with what you are actually saving (time? money? hassle?) means to you in a broader context.

This was an easy example, but if you think about it, you can apply it to just about everything in your life. How about stop comparing yourself with others and assess how you feel about your life broadly — on your own terms? How about focusing on the value of your silver medal instead of the other guy’s gold medal?

Think outside your immediate context, escape easy comparisons and start seeing things in a broader perspective. When you think about life this way, everything can be seen under a new — much more positive — light.

Try it: make notes of some of your important decisions (and some of the not-so important ones) then write down your impressions from a relative as well as an absolute perspective. Are your decisions better one way or another? Why? How?

While simple in theory, thinking in absolutes is not the way we’re wired to think, so doing it always takes a great deal of conscious effort and practice. But it’s absolutely worth it.

(cc) Litemind, some rights reserved. Original post: The Relativity Mind Trap: How Comparisons Can Lead Us Astray.

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Framing Changes Everything Fri, 05 Mar 2010 11:46:37 +0000 How you frame a problem profoundly influences the solutions you get. And it’s too easy to fall into thinking traps when it comes to it. Let’s look at one of these traps — and offer some ideas on how you can overcome it.

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Framing Is Everything

A young priest asked his bishop, “May I smoke while praying?” The answer was an emphatic “No!”

Later, when he sees an older priest puffing on a cigarette while praying, the younger priest scolded him, “You shouldn’t be smoking while praying! I asked the bishop, and he said I couldn’t do it!”

“That’s odd,” the old priest replied. “I asked the bishop if I could pray while I’m smoking, and he told me that it was okay to pray at any time!”

As this joke shows, the way you frame a problem profoundly influences the solutions you get. The same problem, when seen from a different angle can lead to a directly opposite interpretation!

Skillfully framing problems is paramount for better problem solving and decision making.

On the flip side, it’s too easy to fall into thinking traps when it comes to framing. Let’s look at one of these traps — and offer some ideas on how to overcome it.

A Brief Pause for You to Save Some Lives

Let’s make a thought experiment, shall we?

Suppose the government is gearing for the outbreak of an unusual disease, which is expected to kill 600 people. Two alternative programs to combat the disease have been proposed, and you must choose which one you think is better. These are the estimates of the outcomes for each program:

  • Program A: 200 people will be saved.

  • Program B: There’s a 1/3 chance that 600 people will be saved, and a 2/3 chance that no people will be saved.

Make a note of your choice.

Now suppose that, instead of those two programs above, you’ve been presented with the following two programs instead. As in the previous situation, pick the one you think is better.

  • Program C: 400 people will die.

  • Program D: There’s a 1/3 chance that nobody will die, and a 2/3 chance that 600 people will die.

Are You Being Consistent?

Which programs did you pick for the two questions above? (Hint: Most people pick A and D.)

This question was asked in a famous experiment by Tversky and Kahneman (which led to a Nobel Prize for Kahneman), with 72% of participants choosing option A over B, and 78% choosing D over C.

Well, I don’t know about you, but for me these are astonishing results!


In case you didn’t notice, programs A and C are identical, as are programs B and D. They’re objectively the same — the same number of people live and die, with the same odds — but they’re presented — or framed — in different ways!

If people were to act consistently, it would be expected they would pick either A-C or B-D. But the change in wording alone was enough for people to shift their choices from the first option to the second. Many people chose inconsistently compared with their previous choice.

And that’s how powerful framing is.

No matter how “rational” we think we are, emotions and mental images play a large part in our decisions — many times preventing us from seeing the real content behind our options.

The Problem is Not Risk Aversion. It’s Loss Aversion.

Have you ever heard that people are in general averse to risk?

Well, the experiment we looked at strongly suggests that that statement may not be entirely true. When the programs were presented in terms of lives saved, the participants preferred the safe program (Program A). However, when the programs were presented in terms of expected deaths, participants chose the gamble (Program D). If people were risk averse, they’d always choose the safe option.

People are willing to gamble — but usually only when the gamble can avoid losses.

It turns out that in our minds losses are much stronger than gains. We feel much stronger negative emotions when losing than positive emotions when winning (about 2 times stronger according to some studies).

We feel much more disappointed losing $1000 than happy when earning $1000. Saving 200 lives is good, but it is not as appealing as the possibility — even if not that favorable — of avoiding the loss of 600.

Framing Tools

If framing has such an impact in how we decide and solve problems, what is the “correct way” of framing a problem? How can we protect ourselves from our biases? Here are four ideas.

1. Try multiple different perspectives.

Never accept the initial framing without at least some thought — whether it was formulated by you or by someone else.

Try different perspectives and look for distortions in thinking. Play with your problem definition.

Because our perceptual positions determine how we view things, it’s important to learn how to shift perspectives and look at a subject in different ways.

2. Make all-encompassing and neutral statements.

To avoid the biases of posing your problem as losses or gains, state the problem in a neutral way — one that combines both positive and negative perspectives. Make it in such a way that it is redundant, simultaneously encompassing multiple reference points as objectively as possible.

In our previous example with the disease programs, it could become:

  • Program A: 200 people survive. 400 people die.

  • Program B: 1/3 chance for 600 people to survive and 0 to die, and 2/3 for 0 people to survive and 600 to die.

Regardless of which of the options you end up choosing, you can now evaluate them in a much more balanced way.

3. Invert the situation.

Take your problem, invert it and see how you feel about it.

For example, if it’s about earning $1000, imagine that you already have it and now would lose it. In the same manner, if it’s about losing $1000, imagine that you’re $1000 behind and that you’ll earn it.

Check how that feels comparing to the original situation. If you notice a strong asymmetry between your feelings in both situations, this is a strong signal that you’re being affected by the framing of the question.

4. Detach yourself from it.

Check for elements in your problem that trigger disproportionally emotional responses. It’s always useful to be aware of the role our own emotions play when we make decisions. Acknowledge and express your emotions — it would be impossible not to, anyway — but don’t let them cloud your vision.

To separate the rational and the emotional components of the problem, detach yourself from it: Imagine the situation is happening to someone else, someone you don’t know. Conversely, get the opinion of other people who are not involved.

Tune the emotions down for a minute to add a new perspective to your problem. Then feel free to tune them back up.

What About You?

Now, it’s over to you… Have you ever been affected by misframing a situation? Were you able to reframe it? How did it work? Share in the comments!

(cc) Litemind, some rights reserved. Original post: Framing Changes Everything.

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Top 10 Thinking Traps Exposed — How to Foolproof Your Mind, Part II Wed, 08 Jul 2009 12:28:15 +0000 In the first part of this article, we focused on 5 traps that hinder our ability to think rationally. Now it’s time to complete the list and expose the remaining 5 dangerous traps to be avoided. Let’s dive right in.

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Top 10 Thinking Traps Exposed - Part II

In the first part of this article, we focused on 5 traps that hinder our ability to think rationally. As a quick recap, we discussed:

  1. The Anchoring Trap: Over-Relying on First Thoughts
  2. The Status Quo Trap: Keeping on Keeping On
  3. The Sunk Cost Trap: Protecting Earlier Choices
  4. The Confirmation Trap: Seeing What You Want to See
  5. The Incomplete Information Trap: Review Your Assumptions

Now it’s time to complete the list and expose the remaining 5 dangerous traps to be avoided. Let’s dive right in.

6. The Conformity Trap: Everybody Else Is Doing It

In a series of experiments, researchers asked students in a classroom a series of very simple questions and, sure enough, most of them got the answers right. In another group, they asked the same questions but this time there were actors posing as students, purposefully pushing wrong answers. This time around, many more students provided wrong answers based on the leads from the researchers’ assistants.

This “herd instinct” exists — to different degrees — in all of us. Even if we hate to admit it, other people’s actions do heavily influence ours.
We fear looking dumb: failing along with many people is frequently not considered a big deal, but when we fail alone we must take all the heat ourselves. There’s always peer pressure to adopt the behaviors of the groups we’re in.

This tendency to conform is notoriously exploited in advertising. Businesses often sell us products not based on their features, but by showing how popular they are: since others are buying it in droves, why would we not join them?

Conformity is also one of the main reasons why once a book makes into a well-known best-sellers list, it tends to “lock in” and continue there for a long time. People like to consume what “everybody else” is consuming.

What can you do about it?

  • Discount the influence of others. When analyzing information, shield yourself from others’ opinions — at least at first. This is the best way to decide without being subconsciously swayed by popular opinions.
  • Beware “social proof”. Always raise a flag when someone tries to convince you arguing primarily on the popularity of a choice, instead of on its merit.
  • Be courageous. Be willing to overcome obstacles and defend your viewpoints, despite their unpopularity. Don’t be afraid to point out that the Emperor wears no clothes.

7. The Illusion of Control Trap: Shooting in the Dark

Have you noticed that the vast majority of lotto players pick their own numbers instead of using the sometimes available ‘auto-pick’ option (where the point of sales terminal chooses the numbers for you)? We all know that however the numbers are chosen doesn’t change the chance of winning, so why the strong preference for picking our own numbers?

Curiously, even in situations we clearly can’t control, we still tend to irrationally believe that we can somehow influence results. We just love to feel in control.

Of course, it’s always easier to illustrate this trap with chance games, but the tendency to overestimate our personal control of events influences every aspect of our daily lives.

Unfortunately, contrary to the lottery example above, the outcomes of our decisions are usually complex and interconnected. It’s hard to assess to what extent we’re responsible for the results we get. While some of the outcomes can be traced back to our own choices, a part of them will surely remain just as well out of our direct control.

What can you do about it?

  • Understand that randomness is part and parcel of life. Although it may be hard to fathom or even admit it, some things are just random — in the sense that they don’t depend on your effort at all. Accept responsibility for the things you can influence, but know that for many others there is not much you can do. Better than assuming or expecting that every event is under your control is to consciously choose how you respond to them.
  • Beware of superstitions. Consider how much of your decisions are based on things you cannot really explain. Make those unknowns explicit and put them under scrutiny — instead of pretending you can control them.

8. The Coincidence Trap: We Suck at Probabilities

John Riley is a legend. He won a one-in-a-million-chance lottery… twice! That makes it a 1-in-a-trillion event — which means that the lottery is rigged or maybe John must have been singled out by Lady Luck, right?

Well, not really. Let’s try a little math: If, throughout the years, 1000 lottery winners keep playing at least 100 times attempting the “miracle” of winning it once more, that adds up to a non-negligible chance of 10% that someone will make it.

This means that the “miracle” is not only possible but — given enough attempts — its likelihood increases to a point of becoming almost inevitable.

Another classic example: it takes a group of just 23 people to make it more likely than not that two of them share the same birthday (day and month).

That’s how unintuitive probabilities are.

What can you do about it?

  • Don’t over-rely on gut estimates. While useful many times, gut estimates will sometimes be way off the mark. Make sure you properly discount their importance or that you understand the ramifications of trusting them.
  • Beware of “after the fact” probabilities. One thing is the probability of someone having won the lottery twice — looking at it in retrospect. Another completely different thing is that a particular person — chosen before the outcome — wins it: that would indeed qualify as a one-in-a-trillion event — and would make anyone seriously doubt the legitimacy of that lottery.

9. The Recall Trap: Not All Memories Are Created Equal

What’s your best guess for the probability of a randomly selected flight ending in a fatal crash? While many people grossly overestimate it, MIT studies show that in reality these fatal accidents happen at a rate of only 1 in 10,000,000.

The fact that people suck at estimating probabilities explains only partially this tendency to mis-estimate: if you ask the same question right after a major airplane accident, be prepared for even more biased assessments.

What happens is we analyze information based on experience, on what we can remember from it. Because of that, we’re overly influenced by events that stand out from others, such as those with highly dramatic impact or very recent ones. The more “special” an event is, the greater the potential to distort our thinking. Of course, no one ever bothers about the other 9,999,999 planes that arrive safely at their destinations — so there’s nothing more natural than forgetting about them.

What can you do about it?

  • Get hard data. As usual, don’t rely on your memory if you don’t have to. Use it, of course, but always endeavor to find data that confirms or discounts your recollection as soon as possible.
  • Be aware of your emotions. When analyzing information, try to emotionally isolate yourself from it, at least temporarily. If you’re analyzing an event, pretend it happened a long time ago or that it happened to someone else unrelated to you. Likewise, if asking for opinions, find people who are not emotionally involved with them or their consequences.
  • Beware the media. The media is notorious for exaggerating the importance of certain events while conveniently neglecting others. Always evaluate information on its relevance and accuracy, and not on how much exposure it gets.

10. The Superiority Trap: The Average is Above Average

A study surveyed drivers asking them to compare their driving skills to other people in the experiment.
Almost all the participants (93%!) rated themselves as ‘above average’.

With few exceptions, people have much inflated views of themselves. They overestimate their skills and capabilities, leading to many errors in judgment.

And this is the reason I decided to close this article with this particular thinking trap. After making ourselves aware of these many thinking traps, we may now become susceptible to falling into a new one: the belief that we’re now immune to them.

Of course, the first step to avoid thinking traps is awareness and constant vigilance, but beware: it’s much, much easier to notice others falling into these traps than us.

What can you do about it?

  • Be humble. Always remember that everyone has blind spots (yes, that includes me and you)!
  • Surround yourself with honest people. If we all have blind spots, nothing better than having honest people around us to point them out to us.
  • Don’t go overboard. These ‘thinking traps’ are inherent parts of us: they make us human. Applying rigor and rational thinking to our decisions is important, but that doesn’t mean that intuition has completely lost its place. Don’t get me wrong: I still think that knowing about our own thinking traps is very useful — just don’t get too worked up about them.

Further Resources

These ten thinking traps barely scratch the surface when it comes to how our thinking can be biased. Wikipedia’s list of cognitive biases has more than 100 of these traps, making it a hard-to-beat starting point for further learning.

The references for the studies that back up the data in this article can be found on the respective articles on Wikipedia, as well as on the book Smart Choices. That’s a marvelous book about decision making, and one which I highly recommend. Another great book to check out is Thomas Gilovich’s How We Know What Isn’t So.

I hope you enjoyed the article. And just in case you missed it, here’s part 1, where you can find the first 5 thinking traps we started with.

(cc) Litemind, some rights reserved. Original post: Top 10 Thinking Traps Exposed — How to Foolproof Your Mind, Part II.

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Top 10 Thinking Traps Exposed — How to Foolproof Your Mind, Part I Wed, 24 Jun 2009 13:44:21 +0000 Our minds set up many traps for us. Unless we’re aware of them, these traps can seriously hinder our ability to think rationally, leading us to bad reasoning and stupid decisions. Here are the 5 most harmful of these traps and how to avoid each one of them.

The post Top 10 Thinking Traps Exposed — How to Foolproof Your Mind, Part I appeared first on Litemind.

Top 10 Thinking Traps Exposed

Our minds set up many traps for us. Unless we’re aware of them, these traps can seriously hinder our ability to think rationally, leading us to bad reasoning and making stupid decisions. Features of our minds that are meant to help us may, eventually, get us into trouble.

Here are the first 5 of the most harmful of these traps and how to avoid each one of them.

1. The Anchoring Trap: Over-Relying on First Thoughts

“Is the population of Turkey greater than 35 million? What’s your best estimate?”
Researchers asked this question to a group of people, and the estimates were seldom too far off 35 million. The same question was posed to a second group, but this time using 100 million as the starting point. Although both figures were arbitrary, the estimates from the ‘100 million’ group were, without fail, concomitantly higher than those in the ’35 million’ group. (for the curious, here’s the answer.)

Lesson: Your starting point can heavily bias your thinking: initial impressions, ideas, estimates or data “anchor” subsequent thoughts.

This trap is particularly dangerous as it’s deliberately used in many occasions, such as by experienced salesmen, who will show you a higher-priced item first, “anchoring” that price in your mind, for example.

What can you do about it?

  • Always view a problem from different perspectives. Avoid being stuck with a single starting point. Work on your problem statement before going down a solution path.
  • Think on your own before consulting others. Get as much data as possible and explore some conclusions by yourself before getting influenced by other people’s anchors.
  • Seek information from a wide variety of sources. Get many opinions and broaden your frame of reference. Avoid being limited to a single point of view.

2. The Status Quo Trap: Keeping on Keeping On

In one experiment a group of people were randomly given one of two gifts — half received a decorated mug, the other half a large Swiss chocolate bar. They were then told that they could effortlessly exchange one gift for the other. Logic tells us that about half of people would not get the gift they prefered and would hence exchange it, but in fact only 10% did!

We tend to repeat established behaviors, unless we are given the right incentives to entice us to change them. The status quo automatically has an advantage over every other alternative.

What can you do about it?

  • Consider the status quo as just another alternative. Don’t get caught in the ‘current vs. others’ mindset. Ask yourself if you would choose your current situation if it weren’t the status quo.
  • Know your objectives. Be explicit about them and evaluate objectively if the current state of affairs serves them well.
  • Avoid exaggerating switching costs. They frequently are not as bad as we tend to assume.

3. The Sunk Cost Trap: Protecting Earlier Choices

You pre-ordered a non-refundable ticket to a basketball game. On the night of the game, you’re tired and there’s a blizzard raging outside. You regret the fact that you bought the ticket because, frankly, you would prefer to stay at home, light up your fireplace and comfortably watch the game on TV. What would you do?

It may be hard to admit, but staying at home is the best choice here. The money for the ticket is already gone regardless of the alternative you choose: it’s a sunk cost, and it shouldn’t influence your decision.

(This example is from an earlier article which focuses entirely on the sunk cost effect. Check it out if you want to know more.)

What can you do about it?

  • Be OK with making mistakes. Examine why admitting to earlier mistakes distresses you. Nobody is immune to errors, so you shouldn’t make a big deal out of it — just make sure you learn from them!
  • Listen to people who were not involved in the earlier decisions. Find people who are not emotionally committed to past decisions and ask their opinion.
  • Focus on your goals. We make decisions in order to reach goals. Don’t become attached to the particular series of steps you took towards that goal; always consider how you can better fulfill that goal from now on.

4. The Confirmation Trap: Seeing What You Want to See

You feel the stock market will be going down and that now may be a good time to sell your stock. Just to be reassured of your hunch, you call a friend that has just sold all her stock to find out her reasons.

Congratulations, you have just fallen into the Confirmation Trap: looking for information that will most likely support your initial point of view — while conveniently avoiding information that challenges it.

This confirmation bias affects not only where you go to collect evidence, but also how you interpret the data: we are much less critical of arguments that support our initial ideas and much more resistant to arguments against them.

No matter how neutral we think we are when first tackling a decision, our brains always decide — intuitively — on an alternative right away, making us subject to this trap virtually at all times.

What can you do about it?

  • Expose yourself to conflicting information. Examine all evidence with equal rigor. Don’t be soft on disconfirmatory evidence. Know what you are about: Searching for alternatives or looking for reassurance!
  • Get a devil’s advocate. Find someone you respect to argue against the decision you’re contemplating making. If you can’t find one, build the counterarguments yourself. Always consider the other positions with an open mind (taking into account the other mind traps we are discussing here, by the way).
  • Don’t ask leading questions. When asking for advice, make neutral questions to avoid people merely confirming your biases. “What should I do with my stocks?” works better than “Should I sell my stocks today?”

5. The Incomplete Information Trap: Review Your Assumptions

Harry is an introverted guy. We know that he is either a librarian or a salesman. Which one do you think he most probably is?

Of course, we may be tempted to think he’s almost certainly a librarian. Haven’t we been conditioned to think of salesmen as having outgoing, if not pushy, personalities? Too bad this reasoning may be dead wrong (or at least incomplete).

This conclusion neglects the fact that salesmen outnumber librarians about 100 to 1. Before you even consider Harry’s character traits, you should have assigned only a 1% chance that he’s a librarian. (That means that even if all librarians are introverted, all it takes is 1% of introverts among the salesmen to make the chances higher for Harry being a salesman.)

That’s just one example of how overlooking a simple data element can make our intuitions go completely astray. We keep mental images — simplifications of reality — that make we jump to conclusions before questioning assumptions or checking whether we have enough information.

What can you do about it?

  • Make your assumptions explicit. Don’t take a problem statement as it is. Keep in mind that for every problem you’re using implicit information — your assumptions. It’s usually not hard to check the validity of assumptions, but first you need to know what they are.
  • Always favor hard data over mental simplifications. Our preconceptions — such as stereotypes — can be useful in many situations, but we should always be careful to not over-rely on them. When given the choice, always prefer hard data.

For five more thinking traps, check out part II.

(cc) Litemind, some rights reserved. Original post: Top 10 Thinking Traps Exposed — How to Foolproof Your Mind, Part I.

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The Essential Guide to Effective Decision Making Mon, 18 May 2009 15:38:52 +0000 Making decisions is a fundamental life skill, and we can all learn to become much better at it. In this post, I present a simple, systematic approach you can use to make smarter choices starting today.

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Decision Making

Decisions shape our lives. “Should I change careers?” “Where should I live?” “How should I invest my savings?” Making decisions is a fundamental life skill, and we can all learn to become much better at it. In this post, I present a simple, systematic approach you can use to make smarter choices starting today.

The PrOACT Approach to Decision Making

The PrOACT approach (outlined in the book Smart Choices) is by far the best model for decision making that I have seen. It helps you see both the tangible and intangible aspects of your situation more clearly and to translate all pertinent facts, feelings, opinions, beliefs and advice into the best possible decision.

‘PrOACT’ is a mnemonic that stands for five key elements in the model:

  • Problem statement
  • Objectives
  • Alternatives
  • Consequences
  • Tradeoffs

The method consists of examining each of these core elements separately, using them to clarify and organize your thoughts as you go. Let’s take a look at each of its components.

1. Problem Statement

Behind every decision you make there’s a problem you’re trying to solve. The way you state your problem frames your decision. It determines the alternatives you consider and how you will evaluate them. Effectively posing the problem is paramount, as it influences all your subsequent thinking in the decision making process.

In spite of its importance, many of us just skip this step altogether: it’s too easy to state problems as they come to our minds. The better-defined your problem is, the easier it will be to solve it — to the point of the solution becoming self-evident.

Want an example? A friend of mine loved to work for his company, but hated his boss. His dilemma was to resign or to stay in the company. Instead of choosing between these two options, he redefined the problem as how to keep his job, but getting rid of this boss. What did he do? He sent his boss’ CV out and got him interviews for higher-paying jobs. His boss ended up moving to another job — and my friend ended up staying in the same company — promoted to his boss’ previous position. Smart problem redefinition trumps hard thinking.

For a primer on problem definition and many techniques you can use to tweak your problem statement, the article Einstein’s Secret to Amazing Problem Solving is a good starting point.

2. Objectives

After you have a better definition of your problem, now it’s time to get crystal-clear about what you’re trying to accomplish with your decision.

This is another step most of us get wrong: we regard our objectives as obvious and skip explicitly defining them — allowing them to fuzzily float in our minds.
Objectives are the elements that will guide our decision. Clarifying them improves our understanding of the problem, and sets expectations for the possible solutions. It also helps you better communicate what you want as you explain the problem to others.

So, sit down and make a bullet point list of objectives, as explicit and clear as possible. Why exactly do you want to change jobs? Is it your boss? Maybe you want a shorter commute time? Make these reasons clear in writing.

If you find that your objectives don’t come naturally to you, journaling is a tool that can really help. Asking why repeatedly is also a great way to look at your objectives from different viewpoints.

3. Alternatives

Now that you have a well-defined problem and clear objectives, it’s time to finally assess your alternatives and decide, right? Not so fast! First, we should generate alternatives — expand and explore possibilities. The payoff for looking for new, fresh alternatives can be extremely high, so there’s no excuse to skip this step.

There’s a simple aphorism in decision making that says your final choice can never be better than the best alternative you considered. Yes, it’s obvious, I know, but it serves as a reminder of how important it is to take our time and generate as many alternatives as possible before spending time choosing between unsatisfactory choices.

Indeed, it’s much easier (and fun!) to generate better alternatives than to find yourself stuck choosing between two poor ones. Never take the first alternative that comes to your mind. Don’t settle for two, either — shoot for more, way more.

The way to generate new alternatives is to take each of your objectives and ask “How?” or “In what ways can I fulfill this objective?”. Remember, go for quantity, and don’t evaluate the ideas you gathered just yet. Idea-generation techniques such as lists of 100 or idea quotas are your friends here.

4. Consequences

Now comes the time to finally start assessing the merits of each of the alternatives you considered. And the primary way of doing this is by evaluating the consequences of each choice.

After you discard the clearly inferior alternatives you generated, take each of the remaining ones and describe, in writing if possible, what are the consequences of choosing them. That is, imagine how the future will look like for each of them. If you foresee each alternative’s consequences well enough, your decision will become obvious.

Unfortunately, this is much easier said than done. Anticipating consequences in complete and precise terms is hard. Predicting the future is something we humans are notoriously bad at — and that’s particularly true when it comes to predict our own future.

So, don’t take the process of foreseeing consequences sloppily — be as realistic as you can and use every tool in your reach to paint as precise a picture of your future as possible. Talk to experienced people who have already ‘been there, done that’ and get as much information as you can from them.

Also, don’t just imagine you might choose an alternative: imagine yourself in a future where you already chose it. How do you feel about each of the objectives you set? Is it what you first anticipated?

5. Tradeoffs

If you got this far without a solution, it’s probably because your decision is really tricky. It also means that it has conflicting objectives — and that you’ll need to consider some hard tradeoffs between them.

As you might have expected, this is seldom something easy to do. Choosing between unrelated objectives feels like comparing apples with oranges — except that, depending on the number of objectives you have, it may feel more like comparing apples with oranges with elephants with washing powder.

So, before anything else, now is a great time to revisit your objectives, looking for ways to simplify them, based on the extra information you gathered so far.

If that’s still not enough, and the decision is not obvious just by mentally evaluating the tradeoffs, you’ll need a systematic approach to make your tradeoffs.

I’ve seen a couple of these approaches, but the best one I found is the Even Swaps method (which is also described in detail in the same book). I’ve used the method twice already, and I found it fascinating! It’s beyond the scope of this article to go into detail about it, but the basic idea is to take consequences and isolate them in pairs — making a series of small, easy tradeoffs instead of trying to compare each alternative as a big blob of conflicting consequences.

If you think that a complete, detailed explanation about the Even Swaps method would be valuable to you, let me know in the comments. If enough people are interested, I’ll write an article about it.

Final Words

This process may seem like a lot of work to go through. However, after you use it a couple of times, you’ll realize that, if you walk through the steps in order, you’ll seldom need to go through them all.

An interesting characteristic of this method is that each of the five components helps clarify each other. When outlining consequences, you might find out about a new objective. By looking at tradeoffs, you may decide to redefine your problem. That means you should frequently go back and forth between the steps in the model.

Smart Choices on

The book Smart Choices explores even more elements that are required when analyzing the hardest of decisions, such as uncertainty and linked choices. So, I end this article recommending it: Smart Choices: A Practical Guide to Making Better Life Decisions is an easy read full of practical examples, and definitely worth reading by everybody interested in taking their life decisions to the next level.

Update: For a downloadable, ready-to-use PrOACT mind map template (which also includes the information from this article), check out the this post on the Mindjet Blog. Thanks Michael Deutch for creating and sharing it!

(cc) Litemind, some rights reserved. Original post: The Essential Guide to Effective Decision Making.

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Sunk Cost Bias: How It Hinders Your Life and 4 Ways to Overcome It Tue, 01 Jul 2008 17:09:15 +0000 The sunk cost bias can make people literally waste their whole lives on. The good news is that the biggest step to overcome it is simply becoming aware of how it works.

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Sunk Cost Bias

The sunk cost bias is a thinking trap that not only slows down personal improvement efforts, but one which can make people literally waste their whole lives on — something I’ve seen happening with disturbing regularity. The good news is that, like most thinking traps, the biggest step you can take to overcome it is by simply becoming aware of it.

Suppose you pre-ordered a non-refundable ticket to a basketball game. However, on the night of the game, you simply don’t feel like going anymore: you’re tired, there’s a blizzard raging outside, and the game will be televised. You regret the fact that you bought the ticket because, frankly, you would prefer to stay at home, light up your fireplace and comfortably watch the game on TV.

But the fact is that you did buy the ticket — and it was quite expensive and hard to get. What would you do?

The Sunk Cost Bias Exposed

Sunk costs are costs that are irrecoverable. It’s something that you already spent and that you won’t get back, regardless of future outcomes. It’s like that gym club membership you bought: whether you get its benefits or not, the money is gone and there’s no way to get it back.

In the basketball game ticket example, the point is that the money is already gone, so now you are better off doing what pleases you best. So, unless you can sell the ticket, just forget about what you paid for it. You are better off using it to help fuel the fireplace while you comfortably enjoy the game on TV.

This is, of course, easier said than done. There are many psychological blocks in the way of simply discarding an expensive ticket. And if that holds true for a mere basketball game ticket, imagine how strong that effect is when it comes to, say, abandoning a long-time relationship that you invested so much time on, but that just isn’t working anymore.

That’s the sunk cost bias. It’s what you may have heard as “throwing good money after bad”, but it isn’t just about money: any type of investment you make — time, money, effort, anything — is subject to this thinking trap.

Are You a Victim of the Sunk Cost Bias?

Persisting with bad decisions due to our irrational attachment to costs that we cannot recover has become so common that you can find them just about anywhere. Big organizations and governments excel at it. (A government that insists on a war so the lives already spent “are not wasted” comes to mind, but I digress…)

The fact is that this mental trap permeates our decision making and affects not only organizations, but it deeply affects us at a personal level, too. Check out some examples:

  • Bad overall life decisions: What would you say about persisting on an unfulfilling job or career, just because you ‘invested so much time in it’? Or persisting on a bad relationship, just to ‘make all those years worth it’? These are the saddest cases of the sunk cost effect that I know, since people can literally waste years — if not their whole lives — because of it.
  • Bad financial decisions: Do you know anyone who refused to sell something for a perfectly reasonable price, just because they spent so much money in it (maybe property or stocks)? What about casino gamblers that simply won’t quit, claiming they need to make the money that they already lost “worth it”?
  • Bad Everyday Decisions: You ordered too much food, but you eat it anyway despite being full. You keep useless clutter in your home, if only because you paid for it. You watch a bad movie up to the end, only because you started watching it. The examples just go on and on. The consequences for each of them may seem trivial at first, but if you think about it, we make these mistakes so often that they add up pretty quickly.

Why Do We Fall Into the Trap and How to Avoid It

So, if dwelling on sunk costs is a bad idea, why do we do it? More importantly, how do we overcome this thinking trap? Here are 4 main reasons why we do it, along with ways to overcome each of them.

1. We Want to Make the Investment Worth Our While

This is the fundamental reasoning behind how we deal with sunk costs. We have a genuine interest in making our efforts worth our while. We don’t want to feel that we spent anything in vain — time, money, anything. However, even if we know deep inside that our approach is wrong, we still have trouble abandoning it.


Sure, we all expect to have a good return on what we invest. It would be insane not to. Just make sure you’re not on a situation solely because you made the investment in the first place. You don’t make a bad move any better by dwelling more on it, unless you can effectively make something that changes the expected outcome.

Stop spending resources on a bad move — throwing good money after bad — immediately and start spending these resources on a new one: Cut your losses and move on!

2. We Fear Failing and Looking Foolish

We live in a success-oriented culture. Cutting losses means admitting you made a mistake, if not in public, at least to yourself. Our egos will always stubbornly try to hold us to our commitments, so we don’t need to admit our imperfections. If you made a public commitment, you’re even less likely to break it, as there will probably be a lot of explaining to do.


Allow yourself to make mistakes. Quickly admitting your mistakes is much more productive than entrenching yourself in a situation just to “save face”. Be aware that quitting is not failing (actually, sometimes it’s exactly the opposite).

Better yet, do like Socrates and think differently: become proud of admitting your errors. Change your attitude from hiding mistakes to actively exposing them. Look for them: the more, the merrier. You’ll surely feel defenseless and uneasy at first, but once you get used to it, you’ll feel invulnerable to harsh criticism.

Moreover, instead of focusing on the sunk costs, take pride in having recognized the costs associated with sticking to the old approach.

3. We Become Attached to Our Commitments

After we decide to do something, we feel attached to what we committed to. And the bigger the commitment, the harder it is to let go. Not only that, but it’s a human trait to be overconfident that everything we set ourselves to do will pay off. We’re biased when we evaluate the probability of success of already-made commitments. (This is known as overly optimistic probability bias.)


Be aware of the natural bias to stay on your current course of action. While considering other options, evaluate the status quo as it was just another option, rather than the front-runner.

Also, try to detach yourself emotionally from your past decisions. Be especially careful with things that worked at some point in the past as this is not a guarantee that they’ll work in your favor again.

I like to practice what I call “zero-based thinking”. Forget about the past and consider this very moment as your “point-zero” in time: act like all you have is the present. I often do this by pretending that I just woke up with some sort of amnesia. I imagine myself in my current situation, but without any knowledge of how I got there. This way, it’s much easier to focus on my current situation, instead of clinging to past decisions that would drag me down.

4. We Lose Sight of Our Underlying Goals

Sometimes we become so preoccupied by how much time and effort we put into something that we lose sight of its relevance in the greater scheme of things. We become attached to the means and forget about the ends.


Always be mindful of long-term objectives. Don’t confuse any greater goal you want to achieve with the specific means of implementation you’re attached to. Don’t get caught up in justifying your current actions.

Moving away from the basketball game example, suppose your original goal was to have fun, so you rented a movie. If the movie turns out to be a bad one, don’t forget that your goal was not to spend two hours watching a movie, but to have fun. So, turn it off and go have fun, somehow.

Let Go of the Past, Move On

I’m not recommending that you become a quitter by any means. The point is to be always aware of your current situation. If you decide to stick with your current approach, that’s great. Do it consciously and for the right reasons.

And remember that the greatest example of sunk cost you pay is with your own time, and which you will not be able to recover: all that you lived up until now is gone — you just can’t reclaim that time. Stop clinging to the past and make the most of your life right now.

(cc) Litemind, some rights reserved. Original post: Sunk Cost Bias: How It Hinders Your Life and 4 Ways to Overcome It.

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