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The Big Decision

Posted By Domnita On July 6, 2011 @ 11:26 AM In Performance Cyclicality,Psychology,Time Triads,Triangular Psychology | No Comments

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The latest HBR carries an article written by Daniel Kahneman on decision making. The article gives a checklist approach to handling decision making at an institutional level to avoid biases. According to the article, the potential for distortions are so high that knowing biases was not enough to eliminate them. The authors illustrate the reflective and intuitive thinking process. In intuitive thinking we don’t focus on doing things, we just do them. Intuitive is good at making contextual stories. This is when cognitive failures happen because there is no way of knowing when they are happening.

According to the authors talking doesn’t eliminate biases. A more methodical approach is needed. A study observed that eliminating biases achieved returns 7% point higher.

Kahneman and team suggest that eliminating biases can improve decision making profitably. So if the method works for businesses, the approach should also work for investors and markets and…

This article was written for Business Standard [2]

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[1] Image: http://hbr.org/

[2] This article was written for Business Standard: http://business-standard.com/india/news/redefining-market-in-risk-assessment/440827/

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