The impact of the ambiguity effect on decision-making

When something is described as ambiguous, it means that it is confusing, unclear, or open to different interpretations. Entrepreneurs face ambiguous situations all the time; it’s the nature of the business. For example, entrepreneurs make decisions about pricing, marketing, vendors, and finances that don’t have certain outcomes. In addition, entrepreneurs often have to make choices …

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Decision fatigue: how a burden of choices leads to irrational trade-offs

Have you ever felt like you are too tired to make the right choice between several options, especially after a long series of decisions? Decision fatigue can lead to poor choices and irrational trade-offs in decision making. It refers to the deteriorating quality of decisions after a long session of decision making. Too many decisions …

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The power of simplicity: how to manage our complexity bias

We often tend to prefer complex solutions over simple ones; complicated marketing jargon over clear explanations; multi-steps implementations over more direct execution. Complexity can lend an aura of authority to products, which marketers are exploiting to project authority and expertise. Complex processes can also delay decision-making, giving us the illusion of productivity. Why is it …

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Jumping to conclusions: the inference-observation confusion

Do you know someone who always seems to jump to conclusions? While this behaviour may be more obvious in some people than in others, we are all prone to it. In fact, doctors themselves often jump to conclusions: “Most incorrect diagnoses are due to physicians’ misconceptions of their patients, not technical mistakes like a faulty …

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Semantic traps: why vague words are risky

In politics and linguistics, semantic traps are words so vague that we cannot give them specific meaning, or words that are systematically misleading. Semantic traps are often used to stir a debate in a certain direction, or to influence people’s judgement. A famous example is when Republican strategist Frank Luntz wrote a memo to George …

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Managing risk with the NASA Risk Matrix

“It’s not rocket science!” people often say. Well, sometimes, projects can be so complex, making the right decision does feel akin to rocket science. Who better to turn to than one of the biggest space agencies in the world to learn how to manage risk? There are few organisations working on projects as complex as …

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Confirmation bias: believing what you see, seeing what you believe

“The eye sees only what the mind is prepared to comprehend.” — Robertson Davies. A person who thinks women are bad drivers is more likely to notice driving mistakes made by women. A detective who is convinced a suspect is guilty is more likely to pay attention to evidence corroborating their intuition. And, while someone …

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Cognitive biases in entrepreneurship: a research report

Scenario 1 – Joe and Jane decided to play a game in which they toss a coin a few times. Every time a head came up, Joe had to give Jane $10 and every time a tail came up, Jane had to give Joe $10. They could toss the coin any number of times they …

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