Question

Choose one of these three biases (Overconfidence Bias,. Framing Bias, Anchoring Adjustment Bias) and escribe a time when you fell into one of the decision-making traps. How did you come to realize that you had made a poor decision, or at least not an optimal decision? In writing your main response, describe which decision-making trap is involved in your example, and write a definition in your own words of what that trap consists of. Add a final reflection in your main response to address which of the traps seems the most dangerous for decision makers, and why.

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Answer 1

Overconfidence bias takes place when a person thinks that he knows more than his knowledge or predicts future well without understand what future holds. I have also been victim of overconfidence bias. I could not calculate risk factors associated with a business decisions. It was about the opportunity of a new business that was about to grow phenomenally. But due to overconfidence, I took a decision to not invest money in this new business as my existing business was doing very well. I thought that the decision to invest in this new business was correct as I believed that there was no great future in this business. But I predicted wrong about this business potential. I thought my visionary ability was accurate but later I realized that I was become a victim of overconfidence bias.

I certainly become victim of overconfidence trap that reveals that a person thinks that he is more knowledgeable or visionary abilities than others. Another trap in my decision making reveals is confirming evidence trap. I before sidelining the idea to invest in this new business consulted with others and they also said that this had not much potential. Such bias takes place when a person follows suggestions of others to form a decision. The next decision trap is status quo bias. I tried to maintain the status quo of business without taking much risk. The status quo bias decision trap takes place when a person tries to maintain status-quo and does not want to take risk. Prudence bias decision making trap is also visible by my decision as I was extra cautious to invest in this new business. Thus, these decision making traps are evident in my decision making. According to my viewpoint, I think the most dangerous decision making trap is overconfidence trap because this trap causes great losses as the person is not aware of his or her shortcomings in decision-making and he or she may take irrational decisions. It also reveals that person does not welcome feedback of others and does not practice listening practices. These shortcomings affect his decision-making ability poorly.