Is Your Judgment Based on Observation or Hopes?

Tracy Luo November 19, 2013 2 mins read

I like to read in my free time, especially materials related to work and life. Lately, I’ve been reading a book published 15 years ago but still hugely popular: The Psychology of Judgment and Decision-Making. The book talks about a lot of things I agree with and I want to share my thoughts with everyone.

Different people has different prospective towards things. Different inclinations, tendencies and circumstances will combine to influence a person’s judgment and decisions. For this reason, before making a decision, we should consider what motives are driving how we view things, whether or not we’re mixing in our own personal expectations when dealing with problems, and whether or not we’ve exchanged views with those harboring different motivations and expectations.

It’s easy to make the following mistakes:

1: Overconfidence

Solution: Think about the probability that you’re wrong. Perhaps the points others are making are exactly the ones you’ve been neglecting.

2: Common behavioral mistakes (non-cognitive mistakes): Hindering long-term benefit in exchange for short-term benefit; making mistakes out of ignorance; not giving up as the costs increase; letting things deteriorate to a point where they’re out of your control.

Solution: Calculate the end costs before starting. Establish limits; after reaching a limit, re-analyze the situation and reformulate your decisions.

The author recommends first setting a goal, then determining your methods. Decision-makers first set a target, and then determine their methods based on the circumstances, all the while optimizing their methods and reforming their goals based on results.

Of course, this is just a broad recap. If you’re interested in psychology, check out the whole book—it’s worth it!

Tracy Luo's picture
Associate Director | Finance & Strategy Recruitment
tluo@morganmckinley.com