Keep an Open Mind for Better Decision Making
by Mary Suplee on Dec 13, 2018
Recently I heard Annie Duke speak at a financial analyst's luncheon. You might remember her from being on television in the World Series of Poker. She's the only woman to have won the World Series of Poker Tournament of Champions in the NBC National Heads of Poker Championship. You may be wondering why she would be speaking to a bunch of investment professionals. It's because Annie studied clinical psychology at the University of Pennsylvania and wrote her PhD thesis in cognitive psychology. This skill set has clear implications for both poker players and investment professionals who make decisions using sets of complex data.
She made several great points but one in particular stood out to me. This was the point about anchoring. Anchoring is where you seek to find information that reinforces your choices. It is human nature that when you form an opinion, you look for information that reinforces that opinion. Conversely, you readily reject information that runs counter to that opinion. Most people see this as something that happens in politics all the time but it is a very common occurrence with all decision-makers, particularly those making decisions using technical data.
What's very counter intuitive about this is she said that you would expect people who are more intelligent and have more experience making complex decisions to be more open to new inputs and make better decisions. This is not the case. She explained that studies have shown the more intelligent you are, the more likely you are to hold opinions and make decisions that are not necessarily the best ones available based upon the given fact set. The more intelligent people are the less open they are to using new information that runs counter to their preconceived ideas. If you want to make better decisions, you have to make a conscious effort to seek out other sources of information that contradict your sources and give them an honest read with an open mind.