Three Rules for Critical Thinking & Avoiding Bad Decisions

In this lesson we learn how and why many times people end up making bad decisions. This can happen to everyone even very well known and educated individuals. We learn what are the common elements that con artists and fraudsters use to set a trap and exploit their victims. You need to mentally be prepared for such scenarios in order to have a higher chance of preventing them.

In this lecture I tell a personal story where I almost made a very bad investment decision triggered by a suspicious sales person selling penny stocks of a startup. Luckily, in the last minute I smelled some red flags and cancelled the deal which later I realized was a very bad deal. This was the motivation for this course and my goal is to help everyone to be able to recognize these moments and enable them to make the right decision. This entails recognizing the red flags and not ignoring them in addition to having the discipline to buy time in order to give your brain time and space to think carefully.

Rule number one emphasizes on the importance of taking time in order to make important decision. We often time listen to our animalistic intuition and want to take immediate action and jump on seemingly good opportunities. But this can be easily a bad situation that can have sever consequences. We need to take our time in order to analyze the situation so we have a higher chance of making the right decision. Except some rare emergency occasions, we always can take some extra time to think and act. It's very important.

in this lecture I outline a few strategies we can use in order to ask for some more time extension.

When something is too good to be true, it's too good to be true. In this lecture we learn how to avoid the temptation of making bad decisions by following options that are too good to be true.

Zero sum games and situations are a big reg flag! Examples are stock day trading, any type of gambling and casino games, sales people selling junk products that have no value but big commissions for them, and any situation where someone's loss is the other person's win. We should identify these situations and avoid them as much as possible.

Giving free stuff is a popular marketing technic that is also used by scammers, con artists, or anyone who wants to mislead you to sub-optimal options. In this lecture I explain that there is no free lunch. I personally avoid anything that is free because they generally come with a catch or some sort of obligations. Big red flag!!

Fear of missing out is well studied in psychology and human behavior and economy. Many people do things simply because they don't want to miss out. They follow the herd, which can lead to a disaster if the herd is heading to an abyss. In this lecture we learn how to avoid FOMO and make more rational decisions.

Self-serving bias is a cognitive distortion where individuals attribute success to personal skills while blaming failures on external factors. This bias skews decision-making, overestimating one’s control and expertise. In business and marketing, self-serving bias can lead to overconfidence, misjudging market conditions, and ignoring crucial external influences like competition or economic shifts. Understanding this bias helps professionals make data-driven decisions, acknowledge external risks, and improve strategic planning. Overcoming self-serving bias enhances critical thinking, business success, and leadership effectiveness.

Survivorship bias occurs when we focus only on successful cases while ignoring failures, leading to distorted decision-making. In business, this bias can cause overestimations of success rates by analyzing only thriving companies while overlooking those that failed. Entrepreneurs, marketers, and investors often fall into this trap, assuming strategies that worked for others will guarantee their own success. Recognizing survivorship bias helps in making realistic, data-driven decisions by considering both successes and failures, leading to better risk assessment, market analysis, and long-term business growth.

Hindsight bias, or the "I-knew-it-all-along" effect, is the tendency to see past events as more predictable than they were. This bias distorts learning and decision-making by making successes seem inevitable and failures avoidable. In business and marketing, hindsight bias can lead to overconfidence, poor risk assessment, and missed opportunities by assuming past outcomes were obvious. Recognizing this bias helps professionals make objective, data-driven decisions, improve forecasting accuracy, and avoid false confidence in strategies that may not actually be repeatable.

The illusion of control bias makes people believe they have more influence over outcomes than they actually do, leading to overconfidence in decision-making. In business and marketing, this bias can cause entrepreneurs, investors, and executives to underestimate risks, ignore external factors like market shifts, and make flawed strategic choices. Overcoming the illusion of control helps professionals adopt a data-driven approach, acknowledge uncertainty, and make better-informed decisions, ultimately improving business resilience and long-term success.

Do your best and stay hopeful. There are many factors involved that are out of control to be successful and of course if you don't work hard and if you do work hard, there's no guarantee.