The recallability trap refers to the tendency that we can be overly influenced by dramatic events in the past, those that leave a strong impression on our memory.Įxample for the overconfidence trap: 82% of the drivers surveyed feel they are in the top 30% of safe drivers and 86% of students at the Harvard Business School say they are better looking than their peers.Įxample for the prudence trap: Engineers design weapons to operate under the worst possible combination of circumstances, even though the likeliness of those circumstances is actually very rare.Įxample for the recallability trap: People usually exaggerate the probability of rare but catastrophic occurrences such as plane crashes because they get disproportionate attention in the media.This is known in the field of psychology as an "illusion of fluency," which describes our tendency to be overconfident in our abilities without sufficient evidence.The prudence trap takes the form of overcautiousness, or prudence: When faced with high-stakes decisions, we tend to adjust our estimates or forecasts “just to be on the safe side”.The overconfidence trap refers to the tendency that individuals overestimate their ability to predict future events.This type of traps can be split into three: If the CEO makes his decision right after being confirmed, he may fall into the confirming-evidence trap. She presents a strong case that other currencies are about to weaken significantly against the dollar. Before making the decision to adjust the company’s plan to adapt to that assumption, he calls up an acquaintance, CEO of another similar company to check her reasoning. The confirming-evidence bias not only affects where we go to collect evidence but also how we interpret the evidence we do receive, leading us to give too much weight to supporting information and too little to conflicting information.įor example: An CEO of a company may have a concern that US dollar may appreciate against other currencies. The confirming-evidence trap refers to the bias that leads us to seek out information that supports our existing instinct or point of view while avoiding information that contradicts it. Don’t cultivate a failure-fearing culture that leads employees to continue their mistakes. Examine why admitting to an earlier mistake distresses you.Seek out and listen carefully to the views of people who were uninvolved with the earlier decisions and who are hence unlikely to be committed to them.Here are several ways to avoid the sunk-cost trap: Or we may have poured enormous effort into improving the performance of an employee whom we knew we shouldn’t have hired in the first place. This happens because we are unwilling, consciously or not, to admit to our past mistakes.įor example: We may have refused to sell a stock at a loss, forgoing other, more attractive investments. The sun-cost trap refers to the tendency that we are likely to make choice in a way that justifies past choices, even when the past choices no longer seem valid. If you have several alternatives that are superior to the status quo, don’t default to the status quo just because you are having a hard time picking the best alternative.
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