Four strategies for leaders to improve decision-making

Our minds tend to believe repeated information as true even when we know for sure it may be misleading. This 'illusory truth effect' can provoke poor and biased managerial decisions, but there are ways to avoid it.

Jonas De keersmaecker
Katharina Schmid

Every decision we make is based on a raw material: information. The big challenge of our era is not obtaining this information – which is constantly flowing over us – but accurately processing it and discerning helpful and reliable data from misleading claims. For business leaders and managers, misinformed choices can have disastrous effects on their organizations.  

Our minds have evolved to trust the information we are repeatedly exposed to, whether true or not. This function makes sense considering that most everyday experiences are factually true. Such acceptance makes it easier to learn in a complex information field. But of course, this approach can easily backfire when making more strategic decisions.  

The illusory truth effect is induced by the human tendency to perceive repeated information as reliable

In an article published in MIT Sloan Management Review, Esade's Jonas De Keersmaecker and Katharina Schmid, with co-authors Nadia Brashier (Purdue University) and Christian Unkelbach (University of Cologne), describe the illusory truth effect that occurs when we are repeatedly exposed to wrong information – and then propose four strategies to overcome this effect. 

The illusory truth effect is induced by the human tendency to perceive repeated information as more reliable than new information. Previous studies have researched about this phenomenon which unconsciously clouds our judgment even when we know that the facts or sources are not trustworthy. In domains like politics, media, or marketing, this illusory effect has been frequently exploited, sometimes with noteworthy results.  

"While important organizational actions are typically based on a rigorous assessment of the available facts, the illusory truth effect can still influence people when they are gathering information and discussing the decision", the authors of the study declare. Biased hiring decisions, missed opportunities for growth, or poor venturing choices: the risk of making any of these errors can be greatly reduced by following a set of strategies.  

Do not become overconfident  

No one escapes the illusory truth effect, so the first thing leaders must do is accept that they are also exposed. Research has shown that there is a bias blind spot by which many decision-makers can recognize the biases that affect other people's choices – but remain oblivious to their own biases. 

De Keersmaecker, Schmid, and co-authors cite the Nobel Prize winner Daniel Kahneman, who famously stated that if he could eliminate a single judgmental bias, he would choose overconfidence. "Understanding the illusory truth effect and accepting that you are as vulnerable to it as anyone else, is a productive first step towards minimizing its dangers," explain the researchers. 

Seek diverse opinions  

Decisions are not usually taken by one person alone, but with the information and insights shared by team members. However, there's always a risk of creating an epistemic bubble – otherwise known as echo chamber – in which every member of the network shares a similar opinion.  

Research shows that diversity is a crucial element of group performance, and teams with a variety of perspectives outperform more homogenous teams even when they have higher individual abilities. The recommendation is clear: managers should surround themselves with diverse teams and foster an environment where everyone can critically disagree and make counterproposals.  

Build a fact-checking mindset 

Although it may sound obvious, few people question the facts and assumptions they receive. At the end of the day, we may even share information with others that we did not evaluate properly. "Much of the time, we accept new information that we would reject if only we thought a little harder," the researchers state.  

Making the critical evaluation of information a mental routine can be one the most effective strategies against the illusory truth effect. Sometimes asking our interlocutor where they got their information can be enough. Of course, some data requires more profound validation, and this process can be time-consuming, but managers should decide when it is worthwhile delaying decisions for the sake of greater accuracy.  

Insist on the truth  

The very same cognitive shortcut that leads us to accept oft-repeated false information as true can be used the other way around. By insisting on and repeating what we know as true, we can advance a great deal in the fight against misleading facts in our organization. The researchers affirm that "it is especially powerful to restate claims verbatim rather than using different phrasings."  

Of course, this simple but effective strategy holds the risk of inadvertently repeating false information. But avoiding overconfidence, seeking diverse opinions, and building a fact-checking mindset will help prevent falling victim to the illusory truth effect.  

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