Bias In Decision Making

The decision-making process constitutes a procedure that concludes to the final choice from a set of probable activities to achieve the intended objective. The managers and businesses are persistently subjected to decisive challenges. Often these decisions, to a certain extent are made under the conditions influenced by several unconstrained factors that intrude the factual context. The precis outlines a consolidated research of eight articles that discuss varying degrees and grades of bias, their effects on the decision and its process and strategies to minimise their unfavourable outcomes in strategic decision making.

Decision making, a core management practise is a logical, predictive, and definitive process, based on the defined structures of coherent choice; predominantly dependent on the calibre, inclination and notions of the individuals who make them. Unstructured decision-making in more pragmatic decisions is vulnerable to bias and noise which explains the significant variations discovered on thorough evaluation of the judgment’s reliability states Kahneman, et al., (2019). This has been suggested that a stipulated framework provides standardisation in conventional decision making and propounds quality assurance to complex decisions by increasing discipline to decision making and limiting the conventional flaws. However, numerous organizations prefer the conventional approaches rather than using structured one which could limit the implication of structured frameworks. Managers and other key decision-makers sometimes fall victim to biases which may lead them to make less favourable decisions as indicated by the normative models or become indecisive, when faced with problems involving multiple subjective views about solutions. This has been presented by Nikolic, (2018) that certain errors in the behaviour of decision-makers have been observed to be emerging with the development of the behavioural perspective of the decision-making process, due to their limited cognitive abilities and information asymmetry states. On the other end, De Cremer, et al., (2011) argued that the behavioural approach we support decreases in principal – agent models by specifically claiming that a lot of unethical activity takes place beyond individual actors’ knowledge. This advocates the notion that our decisions and judgements are not always coloured by conscious reasoning processes but also occasionally on morality, intuition and affect. However, in these inspections decision-makers were assumed to be fully conscious and completely coherent people who behave in compliance with their purposes and understand the consequences of their repercussions. Meissner & Wulf, (2013) suggests the decision-makers enable better understanding of logical paths leading to various scenarios and build comprehensive strategies using scenario planning. This has been a very effective way to reduce cognitive biases directly affecting the consistency of decision. Workman, (2012) presents a field study conducted on a group of corporate managers and strategic decision-makers in multinational companies over a period of three years found out that strategists will continue to rely on heuristics to some extent in their decision making; thereby calibrating their behaviour in compliance with the amount of risk they are willing to accept in contrast to the benefits they may earn from achieving the goals they are pursuing. Heuristics in behavioural decision theory, suggests that optimism, over pessimism, have substantial indulgence in the present and results in better self-control in future. Moreover, perceived influence mediates the impact of bias on self-regulation decisions and temporal distance (Ladeira & Santini, 2018). However, not many studies persuaded the role of intuition and were confined to restricted contexts. AlKhars, et al., (2019) suggests a traditional framework; imparting a simple training that helps managers to perceive existing cognitive biases and to avert making less effective decisions thereby minimising the cognitive biases occurring from heuristic representativeness. However, on the contrary, to enhance the decisions in order to yield meritorious results Liu, et al., (2017) presents an alternative approach to the traditional de-bias mechanism called the mindspace framework focusing on altering the prevalent contexts thereby emphasizing on both “cognitive limitations” and the “structures of the milieu.” Although these studies help to exclude the predictably suboptimal processes and enhance the probability of the strategists to make better decisions, the approach includes an inappropriate degree of paternalism and does not include straightforward, evidence-based advice.

Summarizing it, effectual strategic decision making is a significant part of any organization from the managerial to the subordinate level for diurnal operations as well as long term objectives. To make such evaluative judgements, decision makers sieve a large amount of complex information and are susceptible to biases intuitively. Given that the nature of heuristics and biases the decision makers exposed to are subconscious, the desired outcomes are susceptible to errors. The strategists can overcome these biased errors by excluding the consistent suboptimal processes to interpret and recognize the biases and thereby using the information to make better decisions. However, not many studies persuaded the role of intuition and were confined to restricted contexts. Thus, the subsequent studies can include broader contexts for more elaborate outcomes.