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Overconfidence

What are your biases… within biases?

‘It always helps to acknowledge that we bring all sorts of un-examined assumptions into any decision, and we all carry biases within our biases. Therefore, try to apply an open, innovative mind when examining your blind spots (design thinking helps)’. According to Prof. Daniel Kahneman, we should also become more aware of the way incentives shape our biases.

While we tell ourselves the simplest stories about our situations, life and innovation is much more messy.

Why don’t startup founders gather greater data about their own behavior. For example, they could start with keeping a decision-making notebook. Every time they come to an important decision, they could map out the inputs of that decision in their diary, and better see the incompleteness of the story they’re telling their-self. Alternatively, they could re-frame the questions.

Most founders almost never do this!

Overconfidence (2:00)

Prof. D. Kahneman

We’re often confident in our intuitive judgments even when we have no idea what we’re doing.

NOTE: video starts & stops at pre-assigned times

Tricking Decision Making

 

  1. NARROW IS BAD:  Try to broaden your view of the situation (avoid bias toward status quo).
  2. THREE OPTIONS:  Often we only leave ourselves with one choice (option); try to identify three options which solve the same problem.
  3. IMPORTANT DECISIONS:  Sometimes it helps to take a break; ‘take 15 minutes before deciding’ or, ‘sleep on it’. Also take time to consider the down-side of each decision choice.
  4. MAKING CHOICES:  Sometimes it helps to ask yourself; what would have to be true for this option to be the best choice and why (try to avoid sunk costs trap – making choices that justify past choices)?
  5. WHAT TO DO?:  Sometimes it helps to ask yourself; If I were advising someone on this decision, what would I suggest they do?
  6. SEEK CLARITY:  When considering important matters, generate options or come to a decision… but not both at same time (think on your own before asking others their opinions, and be aware of confirming evidence bias).
  7. TIME LIMITS:  People can be more effective if they’re given a time limit. It also helps to prompt yourself halfway through the time limit (I have 30 minutes left to decide).
Source: J. Hammond, R. Keeney, and H. Raiffa (Harvard Business Review)
Course Curated By: Dr. G. Danford

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