Decision-Making Traps Part 1: The Anchoring Trap

John S. Hammond, Ralph L. Keeney, and Howard Raiffa wrote an article in Harvard Business Review “The Hidden Traps in Decision Making” which discusses different traps of the mind and different ways in which we can overcome these traps. All of us are susceptible to making bad decisions and judgments unless we can learn to recognize and avoid them. Even though the article was written nearly a decade ago in 1998, it is still highly relevant and important in the context of decision making. Hence, despite its age, we decided to devote a series of posts highlighting each of these six “traps,” and the techniques that these authors recommend to overcome them. This first post discusses “The Anchoring Trap” and will be followed by one post for each of the five remaining traps identified by the authors.

#1: The Anchoring Trap: When considering a decision, the mind gives disproportionate weight to the first information it receives. Initial impressions, estimates, or data anchor subsequent thoughts and judgments. This pernicious mental phenomenon is known as anchoring.

• Big Sky Sees this trap in our clients when. . . time is of the essence. When organizations are under particular pressure to make a decision fast, the anchoring trap becomes particularly acute as there is little patience to wait for alternative information.
• Techniques to overcome: View a problem from different perspectives (use a different starting point to avoid the anchor), be open minded, be careful to avoid anchoring your advisor (tell them as little as possible and ask for their opinion), and be particularly wary of anchors in negotiations.

Our next post in this series will discuss the “Status Quo Trap” outlined in the article and will be posted next week.