Outsmart You Own Bias

Topics: Decision making, Decision theory, Critical thinking Pages: 9 (4624 words) Published: May 19, 2015
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SPOTLIGHT ON DECISION MAKING

MAY 2015
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Outsmart Your
Own Biases

by Jack B. Soll, Katherine L. Milkman, and
John W. Payne

SPOTLIGHT ON DECISION MAKING

SPOTLIGHT

ARTWORK Millo, 2014
B.ART–Arte in Barriera
Turin, Italy

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Outsmart Your Own Biases

by Jack B. Soll, Katherine L.
Milkman, and John W. Payne

S

SUPPOSE YOU’RE EVALUATING a job candidate to lead
a new office in a different country. On paper this is
by far the most qualified person you’ve seen. Her
responses to your interview questions are flawless. She has impeccable social skills. Still, something doesn’t feel right. You can’t put your finger on what—you just have a sense. How do you decide

whether to hire her?
You might trust your intuition, which has guided
you well in the past, and send her on her way. That’s
what most executives say they’d do when we pose
this scenario in our classes on managerial decision
making. The problem is, unless you occasionally go
against your gut, you haven’t put your intuition to
the test. You can’t really know it’s helping you make
good choices if you’ve never seen what happens
when you ignore it.
May 2015 Harvard Business Review 3

SPOTLIGHT ON DECISION MAKING

isn’t enough, as Kahneman, reflecting on his own
experiences, has pointed out. So we also provide
strategies for overcoming biases, gleaned from the
latest research on the psychology of judgment and
decision making.
First, though, let’s return to that candidate you’re
considering. Perhaps your misgivings aren’t really
about her but about bigger issues you haven’t yet articulated. What if the business environment in the new region isn’t as promising as forecast? What if
employees have problems collaborating across borders or coordinating with the main office? Answers to such questions will shape decisions to scale back
or manage continued growth, depending on how
the future unfolds. So you should think through
contingencies now, when deciding whom to hire.
But asking those bigger, tougher questions does
not come naturally. We’re cognitive misers—we
don’t like to spend our mental energy entertaining
uncertainties. It’s easier to seek closure, so we do.
This hems in our thinking, leading us to focus on one
possible future (in this case, an office that performs
as projected), one objective (hiring someone who can
manage it under those circumstances), and one option in isolation (the candidate in front of us). When this narrow thinking weaves a compelling story,
System 1 kicks in: Intuition tells us, prematurely,
that we’re ready to decide, and we venture forth
with great, unfounded confidence. To “debias” our
decisions, it’s essential to broaden our perspective
on all three fronts.

Thinking About the Future

Nearly everyone thinks too narrowly about possible outcomes. Some people make one best guess and stop there (“If we build this factory, we will sell
100,000 more cars a year”). Others at least try to
hedge their bets (“There is an 80% chance we will
sell between 90,000 and 110,000 more cars”).

Because most of us tend to be highly
overconfident in our estimates,
it’s important to “nudge” ourselves
to allow for risk and uncertainty.
4 Harvard Business Review May 2015

COPYRIGHT © 2015 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED.

ALICE MASSANO

It can be dangerous to rely too heavily on what
experts call System 1 thinking—automatic judgments that stem from associations stored in memory—instead of logically working through the information that’s available. No doubt, System 1 is critical to survival. It’s what makes you swerve to avoid a car

accident. But as the psychologist Daniel Kahneman
has shown, it’s also a common source of bias that
can result in poor decision making, because our intuitions frequently lead us astray. Other sources of bias involve...
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