december-2009

084 BUSINESS
THE CLOSING BELL BY JACK GUINAN
TOP FIVE
HOME RUNS
SEATTLE 30.98%
In many parts of the
country, it’s a great time
to invest in a new home.
According to Forbes.com,
prices in these
cities are likely to
rise between
2009 and 2014:
SAN FRANCISCO 26.51%
PITTSBURGH 22.1%
GO MAGAZINE DECEMBER 2009
BOSTON 20.44%
DETROIT 19.96%
A MATTER OF
INVESTMENT
CHOICEAN
Go with your gut. Trust your instincts.
If it doesn’t feel right, don’t do it.
People hear these kinds of instructions
all the time, but Michael J. Mauboussin,
author of Think Twice: Harnessing the Power
of Counterintuition, doesn’t buy these axioms.
“Good quality decision making is a rare
thing,” says Mauboussin, whose book outlines
decision-making biases and the ways in
which initial decisions can be faulty. “What
seems to separate the people who are more successful
in business and investing is not so much
their analytical skills, but how they approach
their problems.”
EXPERT
TEACHES THE VALUE
OF SECOND-GUESSING
YOURSELF
KEEP A DECISION JOURNAL
“Every time you face a consequential decision—professional or personal—write
down why you made the decision and what your rationale was. Humans have
this tendency called ‘hindsight bias,’ which is that once we know the answer [to a
problem] we tend to think we knew more about the event before it happened. The
journal gives you concrete feedback in your own handwriting and helps you to
calibrate and improve your decision making over time.”
PERFORM A PREMORTEM
“Everyone is used to the idea of a postmortem,
where you reflect back on a decision that went
badly, then recreate the circumstances and try
to figure out what went wrong. In a premortem,
you imagine a future decision and
how the decision might go badly, and you
look at what you can change beforehand.”
QUESTION INCENTIVES
“Ask a very simple question when you’re
making a decision: What’s motivating the
people on the other side of this decision?
What are the incentives for these people
and are their incentives aligned with
certain behaviors that may not be good
for decision making?”
Michael J. Mauboussin
MAUBOUSSIN OUTLINES THREE WAYS THAT YOU CAN
IMPROVE YOUR DECISION-MAKING CAPABILITIES:
ILLUSTRATION BY TIM VIENCKOWSKI