BAIN BRIEF - Decision Insights - Why We Behave-And Decide-The Way We Do
BAIN BRIEF - Decision Insights - Why We Behave-And Decide-The Way We Do
BAIN BRIEF - Decision Insights - Why We Behave-And Decide-The Way We Do
In big decisions, individuals can easily fall into confirmation bias, jeopardizing the possibility of reaching the
best outcome.
3. Framing and anchoring. Every decision depends on
information. The structure and reference points of that
information shape how the decision maker receives and
uses it. Chief executives contemplating an acquisition,
for instance, often frame the question as Why should
we do this deal? and then answer it by focusing on
potential but often illusory synergies. If they frame it
instead as How much should we be willing to pay?
the decision can turn out quite differently.
signs of erosion. Overconfidence? Management estimated that the chances of shuttle failure were as little
as 1 in 100,000low enough, as the late physicist
Richard Feynman pointed out, to imply that one could
put up a shuttle every day for 300 years expecting to lose
only one. As for framing, Jim Collins, in How the Mighty
Fall, notes that the crucial go/no-go decision in the
Challenger situation was framed as, Can you prove
its unsafe to launch? Reversing the framingCan
you prove its safe to launch?might have led to a
different decision.
Analyze any bad decision and you are likely to find more
than one of these biases at work, each reinforcing the
others. Consider the tragic 1986 decision to launch the
space shuttle Challenger in spite of unusually cold
weather. Confirmation bias? NASA determined that
previous flights had been successful, even though the
seals on the solid rocket booster showed unexplained
Paul Rogers is a partner with Bain & Company in London and leads Bains Global Organization practice.
Robert Carse and Todd Senturia are Bain partners based in London and Los Angeles, respectively.
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