This document discusses decision making and cognitive biases that can negatively impact decisions. It notes that we make many decisions daily, from simple to complex, and that decisions can have serious consequences. Cognitive biases are mental errors or shortcuts that can lead to incorrect conclusions. Examples of biases discussed include heuristics, confirmation bias, anchoring, and framing. The document emphasizes applying critical thinking to recognize quality decisions based on relevant information and logical reasoning despite inherent uncertainty. It provides questions to evaluate decision quality and avoid common cognitive biases. The overall message is about overcoming cognitive limitations through awareness and practice to make better decisions.

2. A SHORT VIDEO TO GET US STARTED
HTTP://WWW.YOUTUBE.COM/WATCH?V=BSE_SAVX_2A

3. WHEN WAS THE LAST TIME YOU HAD TO
MAKE A DECISION?

4. We start making decisions from the moment we
wake up. These decisions vary in complexity.
Some are relatively simple, some are automatic,
while others demand a higher degree of
reflection and thinking.
Some of those decisions have serious
implications and consequences Good/bad/ugly

5. AS MUCH AS YOU PLAN FOR A DESIRED
OUTCOME
The outcome will depend on the decisions you make and every
subsequent decision that follows.

6. WE ARE CONSTANTLY EVALUATED ON OUR
JUDGEMENT & DECISION MAKING ABILITIES

7. BY OUR EMPLOYER & COLLEAGUES

8. FAMILY,
WIFE OR HUSBAND

9. COGNITIVE BIAS
Is a mental error caused by our simplified information
processing.

10. HEURISTICS
Psychological tendencies that cause the human brain to draw incorrect conclusions.
Mental shortcuts, rules of thumb, or gut-feeling that assist us to make quick
decisions without formal analysis.
Driving
Attacked by a bear/animal
About to get hit by a car

11. We are not even aware we are committing them
WHY ARE THEY CRUCIAL & CAN BE
DANGEROUS?

12. THE FUNCTION YOU OCCUPY OR THE ROLE
YOU PLAY DETERMINES THE IMPACT OF YOUR
DECISION

13. Just like our
physiological system.
You need every
organ to function
properly and
optimally.
From Janitor to CEO
We cannot disregard
anyone.
EVERY FUNCTION/ROLE MATTERS

14. EVERY ONE OF US IS PART OF AN ORGANIZATION IN
ONE WAY OR ANOTHER
Home/Family
Community
Work
Sport

15. CIRCLE OF INFLUENCE
DON’T UNDERESTIMATE INFLUENCE

18. COMPLEXITY THEORY & SYSTEM THINKING

21. Habits &
Personality
Automatic
Associations
Social &
Environmental
influences
Relative
comparisons
Oversimplifica
tions
Mindset defense

22. Confirmation
Anchoring
Framing

23. Sunk Costs
Overconfidence
Recency Effect
MOUNT EVEREST 1996 DISASTER

24. MENTAL MODELS & THE CONFIRMATION BIAS

25. VISUAL SYSTEM & ASSOCIATIVE MEMORY

26. VISUAL ILLUSIONS

27. NEARBY COMPARISON AND CHOICE
First group could have either $10 or a
nice pen
Second group could
have $10, a nice pen,
or an uglier pen

28. LET’S EXPERIMENT
A bat and a ball cost $1.10. The bat is $1 more than the ball. How much is the ball?

29. READ THE COLOR

30. John is a quiet man, with a retiring personality. Is he more likely to be:
 A librarian
 A Salesman

31. HERE IS ONE THAT SHOULD HELP YOU IN
NEGOTIATION
Is the height of the tallest redwood more or less than 1200 feet?
What is your best guess about the height of the tallest redwood?

32. A study of a Campbell’s soup sales promotion was conducted when the product was
on sale for about 10% less than regular price. On some days a sign on the shelf said
“Limit of 12 per person” and on other days the sign said, “No limit per
person.” Shoppers purchased an average of 7 cans of soup when the limit was in
effect, double the amount that they purchased with no limit.

33. WHAT IS THIS PARAGRAPH TALKING ABOUT?

35. THINKING FAST AND SLOW
TWO SYSTEMS
System 1
 Intuitive
System 2
 Reflective

36. CRITICAL THINKING
Reasoning
Argument
 Claims
 Premises
Fallacies
Assumptions
Conclusion

37. BECOME A CRITICAL THINKER
It is a skill you can
practice in order
to master.
Once you master it,
watch how you
perceive others.
Don’t make it
affect you
negatively by
thinking less of
others.

38. RECOGNIZE QUALITY DECISIONS
A Decision framed within a context
Creative and well-thought of alternatives
Relevant & reliable information which to base the
decision upon, while incorporating inherent
uncertainty
Logical Reasoning & analysis that help draw
meaningful conclusions

39. DECISION QUALITY QUESTIONS
Is there any reason to suspect motivated errors, or errors driven by the self-interest of the
recommending team?
Have the people making the recommendation fallen in love with it?
Were there dissenting opinions within the recommending team?
Could the diagnosis of the situation be overly influenced by salient analogies?
Have credible alternatives been considered?
If you had to make this decision again in a year, what information would you want, and can you get
more of it now?
Do you know where the numbers came from?
Can you see a halo effect?
Are the people making the recommendation overly attached to past decisions?
Is the base case overly optimistic?
Is the worst case bad enough?
Is the recommending team overly cautious?

40. We are great at recognizing our physical limitations and we tend to do something about it. Are
willing to do the same with our Cognitive limitations?

41. Thank you
CREDIT GOES TO DR DAN ARIELY & STANDFORD UNIVERSITY – STRATEGIC DECISIONS GROUP