Hidden traps in decision making

The Anchoring trap

Is the distance between the sun and the earth 50 crore kilometres? Whats your best estimate of the distance between the sun and the earth ? WHEN CONSIDERING A DECISION THE MIND GIVES DISPROPORTIONATE WEIGHTAGE TO THE FIRST INFORMATION IT RECEIVES . HOW CAN WE USE ANCHORING WITH OUR CUSTOMERS? HOW DO WE GET ANCHORED , MOST TIMES?

THE STATUS QUO TRAP The First Automobiles revealingly called Horseless carriages , looked very much like its predecessor . Example of Shares

A Desire to protect Our Ego damage . Breaking from the Status Quo means taking action , and when We take action , We take responsibility , thus opening ourselves to criticism and to regret . HENCE ONE NATURALLY LOOK FOR REASONS TO DO NOTHING . STICKING WITH THE STATUS QUO IS A SAFER COURSE BECAUSE IT PUTS ONE WITH LESSER PSYCHOLOGICAL RISK
HOW RELEVANT IS THIS TO OUR BUSINESS?

FRAMING TRAP
THE FIRST STEP IN MAKING A DECISION IS TO FRAME A QUESTION . THE WAY A PROBLEM IS FRAMED CAN PROFOUNDLY INFLUENCE THE CHOICES ONE MAKES.

A FRAME CAN ESTABLISH A STATUS QUO OR INTRODUCE AN ANCHOR .

TYPES OF FRAMES FRAMES AS GAINS Vs LOSSES DIFFERENT REFERENCE POINTS .

FRAMES AS GAINS Vs LOSSES

You have to sell three machines at twenty lakhs each .You have to give a discount of One lac per machine , but you have to save as much as possible on the discount part .You have two options . Option A: In this plan you can save two lacs . Option B : In this plan there is a 33% chance of selling all 3 machines but 66% chance of selling no machines at all. Option C:In this plan you cannot sell two machines . Option D: In this plan there is a 66% chance of saving 3 Lacs and a 33% chance of losing 3 lacs .

FRAMING WITH DIFFERENT REFERENCE POINTS WOULD YOU ACCEPT A 50:50 CHANCE OF EITHER LOSING Rs.300 OR WINNING Rs.300. WOULD YOU PREFER TO KEEP YOUR BANK BALANCE OF Rs.2000 , OR TO ACCEPT A FIFTY -FIFTY CHANCE OF HAVING WITH Rs.1700 OR Rs.2500 ESTIMATING AND FORECASTING TRAPS THE OVER CONFIDENCE TRAP THE PRUDENCE TRAP THE RECALLABILITY TRAP