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Each and every day we are faced with a multitude of decisions. Some of these are relatively small, such as deciding what to wear or what to have for breakfast. Others are big and can have a major influence on the course of our life, such as deciding where to go to school or whether to have children. Some decisions take time while others must be made in a split-second. While we employ a number of differentdecision-making strategies, we also often fall prey to a number of common fallacies, biases, and other decision-making problems.

Discover which decision-making mistakes and obstacles might be influencing the choices you make each and every day.

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Heuristics

Decision-making problems are often the result of relying too heavily on mental shortcuts that have worked in the past. Aheuristicis a sort of mental shortcut or rule of thumb that we utilize when making a judgment or decision. These heuristics help to lighten the mental load when we make choices, but they can also lead to errors.

Heuristics come with a couple of major advantages. First, they allow us to reach conclusions quickly. Second, heuristics also tend to work quite frequently. But as with all kinds of shortcuts, they can sometimes have disadvantages. They can sometimes lead us to make mistakes and misjudge situations.

Two common types of mental shortcuts are:

Overconfidence

Another problem that can impact decision-making is ourtendency to overestimate our own knowledge, skill, or judgment. In a classic experiment looking at this phenomenon, researchers Baruch Fischhoff, Paul Slovic, and Sarah Lichtenstein gave participants a variety of statements that had two different answers.Participants were asked to select the answer they believed was correct and then rate how confident they were in their answers. When people stated that they were 100% confident in their answers, they were only correct about 80% of the time.

So why do people tend to be overconfident in their judgments?

One example of this overconfidence is a type of cognitive bias known as theDunning-Kruger effect. This bias causes people to overestimate their own intelligence and abilities, essentially blinding them to their own incompetence.

No matter what the cause, this tendency to overestimate our own knowledge can lead topoor decisions. Imagine that you are traveling to Las Vegas with a friend. You’ve been there a couple of times before so you assume that you know the route you should take and you instruct your friend to take a particular exit that you believe is the correct one. Unfortunately, you misremembered the route and the exit turns out to be the wrong one. Your overconfidence in your ability to navigate the route led to the wrong choice and added considerable time on to your journey.

Hindsight Bias

After something has happened, do you ever look back on the event and feel like you should have known what the outcome would be? In psychology, this tendency to look back retrospectively and easily spot all the signs leading up to a particular outcome is known as thehindsight bias. Sometimes referred to as the “I-knew-it-all-along” phenomenon, this tendency can lead us to believe that we can actually predict consequences in situations that are really dependent upon chance.

For example, a gambler might mistakenly believe that they can accurately predict the outcome of a game of cards. In reality, there is no way that he can know what will happen since the game is based upon probability.

The hindsight bias can cause problems when it leads you to believe that you should have been able to foresee the outcome of situations that really weren’t that predictable. As a result, you might make future decisions based on the information you learned from past mistakes. Rather than relying on factors related to the present situation, you might find yourself trying to guess the outcome based upon other, possibly unrelated experiences.

Illusory Correlation

Whenmaking decisions, we sometimes see relationships that do not really exist. For example, we might believe that two unrelated events have some type of relationship simply because they occurred around the same time. In other cases, a one-time association between two different variables might lead us to assume that the two are somehow connected. For example, if you have a bad experience with a rude waitress, you might mistakenly believe that all waitresses are rude.

This tendency to see relationships where none exist is known in psychology as anillusory correlation. In addition to leading to faulty beliefs, illusory correlations can also cause problems in the decision-making process. For example, imagine that you are interested in getting a new pet but you are not sure which type of pet you might want. A bad childhood experience with a dog might lead you to hold the mistaken belief that all dogs are aggressive and tend to bite. This can influence you as you make your choices about which pet to get, and might lead you to reject getting a puppy even though a dog would likely make a great pet for you.

A Word From Verywell

While we all like to believe that we make our choices based on logic and rationality, the fact is that there are a number of decision-making problems that can complicate this process. Being aware of some of these potential pitfalls might help you make better decisions in the future.

7 SourcesVerywell Mind uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read oureditorial processto learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.Dale S.Heuristics and biases.Bus Inf Rev. 2015;32(2):93-99. doi:10.1177/0266382115592536Walker AC, Stange M, Fugelsang JA, Koehler DJ, Dixon MJ.Unclaimed prize information biases perceptions of winning in scratch card gambling.J Gambl Stud. 2018;34(4):1355-1375. doi:10.1007/s10899-018-9770-2Fischhoff B, Slovic P, Lichtenstein S.Knowing with certainty: the appropriateness of extreme confidence.J Exp Psych Human.1977;3(4):552–564. doi:10.1037/0096-1523.3.4.552Serra MJ, Demarree KG.Unskilled and unaware in the classroom: college students' desired grades predict their biased grade predictions.Mem Cognit. 2016;44(7):1127-37. doi:10.3758/s13421-016-0624-9Dunning D. 2011.The Dunning‐Kruger effect: on being ignorant of one’s own ignorance.Adv Exp Soc Psychol.2011;44: 249– 94. doi:10.1016/B978-0-12-385522-0.00005-6Groß J, Pachur T.Age differences in hindsight bias: A meta-analysis.Psychol Aging. 2019;34(2):294-310. doi:10.1037/pag0000329Weigl M, Mecklinger A, Rosburg T.Illusory correlations despite equated category frequencies: A test of the information loss account.Conscious Cogn. 2018;63:11-28. doi:10.1016/j.concog.2018.06.002Additional ReadingBazerman MH. Judgment and decision making. In Biswas-Diener, R, Diener E, eds.Noba Textbook Series: Psychology. Champaign, IL: DEF Publishers; 2018.

7 Sources

Verywell Mind uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read oureditorial processto learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.Dale S.Heuristics and biases.Bus Inf Rev. 2015;32(2):93-99. doi:10.1177/0266382115592536Walker AC, Stange M, Fugelsang JA, Koehler DJ, Dixon MJ.Unclaimed prize information biases perceptions of winning in scratch card gambling.J Gambl Stud. 2018;34(4):1355-1375. doi:10.1007/s10899-018-9770-2Fischhoff B, Slovic P, Lichtenstein S.Knowing with certainty: the appropriateness of extreme confidence.J Exp Psych Human.1977;3(4):552–564. doi:10.1037/0096-1523.3.4.552Serra MJ, Demarree KG.Unskilled and unaware in the classroom: college students' desired grades predict their biased grade predictions.Mem Cognit. 2016;44(7):1127-37. doi:10.3758/s13421-016-0624-9Dunning D. 2011.The Dunning‐Kruger effect: on being ignorant of one’s own ignorance.Adv Exp Soc Psychol.2011;44: 249– 94. doi:10.1016/B978-0-12-385522-0.00005-6Groß J, Pachur T.Age differences in hindsight bias: A meta-analysis.Psychol Aging. 2019;34(2):294-310. doi:10.1037/pag0000329Weigl M, Mecklinger A, Rosburg T.Illusory correlations despite equated category frequencies: A test of the information loss account.Conscious Cogn. 2018;63:11-28. doi:10.1016/j.concog.2018.06.002Additional ReadingBazerman MH. Judgment and decision making. In Biswas-Diener, R, Diener E, eds.Noba Textbook Series: Psychology. Champaign, IL: DEF Publishers; 2018.

Verywell Mind uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read oureditorial processto learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.

Dale S.Heuristics and biases.Bus Inf Rev. 2015;32(2):93-99. doi:10.1177/0266382115592536Walker AC, Stange M, Fugelsang JA, Koehler DJ, Dixon MJ.Unclaimed prize information biases perceptions of winning in scratch card gambling.J Gambl Stud. 2018;34(4):1355-1375. doi:10.1007/s10899-018-9770-2Fischhoff B, Slovic P, Lichtenstein S.Knowing with certainty: the appropriateness of extreme confidence.J Exp Psych Human.1977;3(4):552–564. doi:10.1037/0096-1523.3.4.552Serra MJ, Demarree KG.Unskilled and unaware in the classroom: college students' desired grades predict their biased grade predictions.Mem Cognit. 2016;44(7):1127-37. doi:10.3758/s13421-016-0624-9Dunning D. 2011.The Dunning‐Kruger effect: on being ignorant of one’s own ignorance.Adv Exp Soc Psychol.2011;44: 249– 94. doi:10.1016/B978-0-12-385522-0.00005-6Groß J, Pachur T.Age differences in hindsight bias: A meta-analysis.Psychol Aging. 2019;34(2):294-310. doi:10.1037/pag0000329Weigl M, Mecklinger A, Rosburg T.Illusory correlations despite equated category frequencies: A test of the information loss account.Conscious Cogn. 2018;63:11-28. doi:10.1016/j.concog.2018.06.002

Dale S.Heuristics and biases.Bus Inf Rev. 2015;32(2):93-99. doi:10.1177/0266382115592536

Walker AC, Stange M, Fugelsang JA, Koehler DJ, Dixon MJ.Unclaimed prize information biases perceptions of winning in scratch card gambling.J Gambl Stud. 2018;34(4):1355-1375. doi:10.1007/s10899-018-9770-2

Fischhoff B, Slovic P, Lichtenstein S.Knowing with certainty: the appropriateness of extreme confidence.J Exp Psych Human.1977;3(4):552–564. doi:10.1037/0096-1523.3.4.552

Serra MJ, Demarree KG.Unskilled and unaware in the classroom: college students' desired grades predict their biased grade predictions.Mem Cognit. 2016;44(7):1127-37. doi:10.3758/s13421-016-0624-9

Dunning D. 2011.The Dunning‐Kruger effect: on being ignorant of one’s own ignorance.Adv Exp Soc Psychol.2011;44: 249– 94. doi:10.1016/B978-0-12-385522-0.00005-6

Groß J, Pachur T.Age differences in hindsight bias: A meta-analysis.Psychol Aging. 2019;34(2):294-310. doi:10.1037/pag0000329

Weigl M, Mecklinger A, Rosburg T.Illusory correlations despite equated category frequencies: A test of the information loss account.Conscious Cogn. 2018;63:11-28. doi:10.1016/j.concog.2018.06.002

Bazerman MH. Judgment and decision making. In Biswas-Diener, R, Diener E, eds.Noba Textbook Series: Psychology. Champaign, IL: DEF Publishers; 2018.

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