Here are five of the most harmful of these traps, and how to avoid each one of them:
1. The Anchoring Trap: Over-Relying on First Thoughts
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.
Always view a problem from different perspectives. Think on your own before consulting others. Seek information from a wide variety of sources.
2. The Status Quo Trap: Keeping on Keeping On
People tend to repeat established behaviors, unless they are given the right incentives to change them. The status quo automatically has an advantage over every other alternative.
Consider the status quo as just another alternative. Know your objectives. Avoid exaggerating switching costs.
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. 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.
Be OK with making mistakes. Listen to people who were not involved in the earlier decisions. Focus on your goals.
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. You have just fallen into the Confirmation Trap: looking for information that will most likely support your initial point of view.
Expose yourself to conflicting information. Get a devil’s advocate. Don’t ask leading questions.
5. The Incomplete Information Trap: Review Your Assumptions
Overlooking a simple data element can make our intuitions go completely astray. Everyone keeps mental images that make them jump to conclusions before questioning assumptions or checking whether they have enough information.
Make your assumptions explicit. Always favor hard data over mental simplifications.