Decision Traps
The theory of decision traps outlines the problems managers can face when trying to make a decision for the business. In order to be able to analyse the theory of decision, they must first be defined, to do this effectively this essay will look at the work of Russo and Schoemaker and other theorist who have researched the traps. This essay will then go on to give real life examples of a decision traps to exemplify them effectively.
Making decisions are an everyday occurrence, especially in the role of a manger of a business. There are times were the decisions they make will be for the best, however there are times when they can have a negative impact on the business as a whole. Russo and Schoemaker describe decision traps as being forced into making a decision you would not normally due to time constraints or framing (1990). There are many different ways decision traps can be defined and after analysing them, this essay will look specifically at the at the work of Hammond and how he defines decision traps:
1. Anchoring
2. Status Quo
3. Sunk Costs
4. Confirming Evidence
5. Estimating and Forecasting
6. Framing
7. Recallability Trap
8. Over Confidence Trap
These are the traps that lead to bad decisions being made; I personally experienced elements of these traps when deciding what University I was going to attend. At first most of my friends had decided to attend Edinburgh University and this factor swayed me into wanting to pick Edinburgh as my first choice. This exemplifies the Status Quo of a decision trap as my choice was influenced by the familiar and what I knew. Edinburgh was closer to home and it would make my transition from school to university easier as it would be of similar surroundings having my friends there. To be able to avoid the status quo trap is essential to ask yourself if the status quo really suits your objectives and ask if you would choose the status quo option if it wasn’t a status quo? When looking at the wider perspective
Making decisions are an everyday occurrence, especially in the role of a manger of a business. There are times were the decisions they make will be for the best, however there are times when they can have a negative impact on the business as a whole. Russo and Schoemaker describe decision traps as being forced into making a decision you would not normally due to time constraints or framing (1990). There are many different ways decision traps can be defined and after analysing them, this essay will look specifically at the at the work of Hammond and how he defines decision traps:
1. Anchoring
2. Status Quo
3. Sunk Costs
4. Confirming Evidence
5. Estimating and Forecasting
6. Framing
7. Recallability Trap
8. Over Confidence Trap
These are the traps that lead to bad decisions being made; I personally experienced elements of these traps when deciding what University I was going to attend. At first most of my friends had decided to attend Edinburgh University and this factor swayed me into wanting to pick Edinburgh as my first choice. This exemplifies the Status Quo of a decision trap as my choice was influenced by the familiar and what I knew. Edinburgh was closer to home and it would make my transition from school to university easier as it would be of similar surroundings having my friends there. To be able to avoid the status quo trap is essential to ask yourself if the status quo really suits your objectives and ask if you would choose the status quo option if it wasn’t a status quo? When looking at the wider perspective