Examples Of Distortion In Decision Making

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Distortions in Decision Making
Introduction
Decision-making’s the cognitive process resulting in the selection of a course of action from alternative possibilities. It’s the study of identifying & choosing alternatives based on the values & preferences of the decision maker. It is the central activity of management & is a huge part of any process of implementation, (businessdictionary.com). This essay talks about decision making in financial terms. Distortions in making decisions lead us to make decisions that result in suboptimal outcomes & no wonder, this needs to be changed. There are several steps that need to be taken to improve these results & avoid such misjudgements. Looking into various academic sources, journals & a personal experience,
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The innate (inner instincts) or unconscious first thoughts or impulses are changed & adapted by norms, mores & what we have been taught to become different to conform, Power (1998). In decision making too, distortions play a really important role. One can easily lean towards a less productive decision because of distortions, Simon (1979). Cognitive distortion is an exaggerated or irrational thought pattern that’s believed to perpetuate the effects of psychological states, Goleman (1990). These distortions are thoughts that cause individuals to perceive reality inaccurately, these thinking patterns often reinforce negative thoughts or emotions. There are several types of cognitive distortions : polarized thinking, filtering, overgeneralisation, catastrophizing etc, (psychcentral.com). The proof that distortions lead to suboptimal decisions has been presented here using a personal …show more content…
Moreover, taking decisions in intense drive states like pain, sleep deprivation etc, should be avoided, Pham (2007). Moreover, to avoid suboptimal decisions, one should undertake a cost-benefit analysis i.e. list the advantages & disadvantages of feelings, thoughts or behaviours. A cost-benefit analysis will help us to ascertain what we are gaining from feeling bad, distorted thinking, and inappropriate behaviour. Moreover, another effective way to avoid suboptimal decisions due to cognitive distortions is the survey method i.e. seek the opinions of others regarding whether our thoughts and attitudes are realistic. If we believe that our anxiety about an upcoming event is unwarranted, check with a few trusted friends or relatives, Grohol (2011). The other steps the decision maker in the case above could’ve taken is that he could’ve conducted a well structured research about the different alternatives for the funds & then take the best course of action among the different alternatives. The borrower in the above situation was also a victim of overgeneralisation which is defined as taking a single negative experience and expecting it to forever be true. An individual practicing this cognitive distortion may say “I didn’t have friends in middle school, I’ll never have friends in

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