- anchoring trap, -the mind gives heavy weight on first information it receives [hence first impressions]. Everyone seems to compare most things to the first presentation or info received. Overcome this, by not making premature conclusions.
- status quo trap, - tendency to believe that most recent observations will effect future. Use a rationale DM process to overcome.
- confirming evidence trap, - bias giving more weight to information that supports an existing or preferred point of view instead of info that contradicts. To ensure objectivity:
be equal to all evidence, enlist independent thinkers to argue your preferred conclusion,
be honest about your motives
- overconfidence trap, - people overestimate the accuracy of their forecasts. Widen the range of possibilities around the primary forecast.
- prudence trap, - to temper forecasts so they don't appear extreme. Decisions that are big tend to have more caution. Widen the range of possibilities around the primary forecast. Review sensitive estimates in light of supporting analysis.
- recallability trap- forecasts to be influenced by events that left a strong impression on a persons memory. Ground your conclusions with objective data and process rather than personal emotion and memory.
Saturday, February 17, 2007
The limits of Psychological Traps
Hammond, Keeney, and Raiffa  formulated several psychological traps relevant to the discussion of the limits in relation to capital market expectations CME. These traps undermine an analyst's ability to make accurate and unbiased forecasts.
Posted by NoNAME at 10:54 AM