There are many reasons why intelligent, reasonable people make bad decisions. One of those reasons is that a decision may be more the result of unconscious, mental short cuts, not rational, objective facts and evidence. A recent article in Entrepreneur magazine discusses some of the downsides of how we make decisions.

Why Do Smart People Make Bad Decisions?

1. Survivorship bias

2. Loss aversion

3. The availability heuristic

4. Anchoring

5. Confirmation bias

These mental short cuts and tendencies can impact negotiations.

• If a client recently read about a similar case that resulted in a plaintiff receiving a large reward, it could bias both sides. He or she might believe the case is worth more than it actually is.
• It may be easier to convince a client to accept an offer if it’s framed as a way to prevent loss: “If you don’t accept the offer and we go to trial you may lose what’s on the table now or the plaintiff may win, be awarded a far greater amount so you should cut your losses now by agreeing to the demand.
• If a client is convinced they are right and a certain amount of money is all they’re willing to offer or accept, you may be wasting your breath when you tell your client your opinion of the applicable law or the value of the case.

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