| |October - 20189A decision that appeared judicious based on the information available at the time may appear negligent in hindsight if an outcome is badAnchoring is used in many instances for example price negotiations. The first person who suggests a number sets the anchor for later decisions.Framing­is a cognitive bias where we react differently depending on how information is presented (Kahneman and Tversky, 1981). For example, beef that is 90 percent lean is more appealing than beef that is 10 percent fat. In another example we could say the 1-year survival rate of a procedure is 90 percent or the 1-year mortality rate for the procedures is 10 percent. In a world where data is becoming a driving factor in decisions we must be careful how we present the information.Halo Effect ­ the halo effect is a cognitive bias that occurs when we use impressions in one area to make decision or assumptions in another area (Thorndike, 1920). For example, when we meet someone and they are nice, cordial, and good looking we assume that they are good at their job. The reverse is true as well. This can cause distortions in the way a person assessed and can affect job hiring, how much we will help others, or even if someone is believable. How We Analyze Past Decisions Can Be CostlyTypically, we want to use information from past decisions to make future decisions, and this can have bad side effects in some instances. There are limitations to the human mind that impact how we evaluate a decision. We are unable to reconstruct our past states of knowledge once we have accepted a new view. According to Daniel Kahneman in his book Thinking Fast and Slow (2011), Hindsight bias causes reviewers of decisions to focus on the outcome alone rather than the data that was available when the decision was made. A decision that appeared judicious based on the information available at the time may appear negligent in hindsight if an outcome is bad. Kahneman warns that hindsight bias is especially bad for those who act as agents of others including coaches, CEOs, politicians, doctors, social workers, and those who are advisors. When the outcome of a decision is bad the agent is blamed. Because of law suits against doctors, additional administrative standards were put in place including more high cost testing. Another consequence of hindsight bias is risk aversion. In higher education we act as agents for students when it comes to decisions regarding financial aid as well as academics. Decide What a Good Decision is FirstWhen important decisions need to be made it is crucial to define what a good decision is first. In meetings have everyone write down their view on a topic before the first person speaks. The first person who speaks can anchor everyone else. Make sure the data we present portrays information in ways that assist decisions for the greater good and not our own preferences. We cannot eliminate or change our cognitive biases; however, we can take time to slow down our decision making and let system 2 have some input. Linda Hartford
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