Pitfalls of Data-Driven Decisions
by Megan MacGarvie and Kristina McElheran
Even with impressively large data sets, the best analytics tools, and careful statistical methods, managers can still be vulnerable to a range of pitfalls when using data to back up their toughest choicesâespecially when information overload leads us to take shortcuts in reasoning. In some instances, data and analytics actually make matters worse.
Psychologists, behavioral economists, and other scholars of human behavior have identified several common decision-making traps. Many of these traps stem from the fact that people donât carefully process every piece of information in every decision. Instead, we often rely on heuristicsâsimplified procedures ...