Confirmation biases and errors in decision making (part 2)

Escalation of commitment - An increased commitment to a previous decision in spite of negative information.

Randomness error - the tendency of individuals to believe they can predict the outcome of random events.

Risk aversion - The tendency to prefer a sure gain of a moderate amount over a riskier outcome, even if the riskier outcome might have a higher expected pay-off.

Hindsight bias - the tendency to believe falsely, after an outcome of an event is actually known, that one would have accurately predicted that outcome.

Focus on goals - without goals, you can't be rational, you don't  knowwhat information you need, you don't know which information is relevant and which is irrelevant, you'll find it difficult to choose between alternatives, and you're far more likely to experience regret about the choices you make. Clear goals make decision making easier and help you eliminate options that are inconsistent with your interests.

Look for information that disconfirms your beliefs
One of the most effective means for counteracting overconfidence and the confirmation and hindsight biases is to actively look for information that contradicts your beliefs and assumptions. When we overtly consider various ways we could be wrong, we challenge our tendencies to think we're smarter than we actually are.

Don't try to create meaning out of random events
The educated mind has been trained to look for cause and effect relationships. When something happens, we ask why. And when we can't find reasons, we often invent them. You have to accept that there are events in life that are outside your control. Ask yourself if patterns can be meaningfully explained or whether they are merely coincidence. Don't attempt to create meaning out of coincidence.

Increase your options
Now matter how many options you've identified, your final choice can be no better than the best of the option set you've selected. This argues for increasing your decision alternatives and for using creativity in developing a wide range of diverse choices. The more alternatives you can generate, and the more diverse those alternatives, the greater your chance of finding an outstanding one.