Essays on Cognitive Reflection and Decision Making Case Study

Download full paperFile format: .doc, available for editing

The paper "Cognitive Reflection and Decision Making" is a great example of a Marketing Case Study. This paper is based on an incisive analysis of the marketing case study of RBS Skal Company in Latvia. The paper utilizes decision making theories to identify various critical decision-making points in the case study. The paper has analyzed the various decisions made at RBS using the relevant models and frameworks to bring out the issues and give well-informed recommendations on how the decisions can be made. The paper has also utilized extensive research material to support the arguments in each case in the analysis of the case study. RBS SKALS CASE STUDY FROM A PSYCHOLOGICAL PERSPECTIVE Schema Marie is a good entrepreneur with a strong drive to see that RBS becomes the market leader in the Latvian construction company.

He is said to be a man of his word and his employees love him. However, Maris only believes that the right decisions in the company can only be made by him. He has a mental structure that makes him believe that only his opinion can mean the best for the company.

This is results put him in a collision with the view of the finance director as regards the profitability of some ventures. But Maris can hear none of it as he wants to pursue what he wants as according to him he is right. This is a schema about oneself. Once it is created in the mind it is very hard to remove and often one will fight to defend the schema (Vira & Haimes, 2008). In this case, the finance director cannot even try to point out the possibility of making losses from the direction Maris wants to move and he chooses to avoid confrontation with him.

Maris is also very authoritarian and although he and two others own the company Maris doubles up as the managing director too. He does not delegate any duties or signatures to anybody. He feels only he can make the right decisions. As a result, his office is always busy with people waiting outside to get authorization signatures from Maris. He is so busy that his family rarely gets a time to spend with him.

This self-perceived schema is also evident by the fact that Maris wants to inspect each and every project that the company is handling. Consequently, he oversteps his mandate and goes ahead to do a job that he has already delegated a person to do. It is a good hands-on approach but it may lead to conflicts and confusion. If only Maris can analyze this particular schema of being very domineering in the running of the company, then he can be able to learn the positive and the negative effects of it and change accordingly.

It will be very appropriate if there is a clear definition of roles in the company and a level of professionalism in the management of the company. This way then Maris will delegate duties effectively and assume the role of an overseer and motivator. Valence effect According to this theory, we as humans generally tend to be more optimistic than pessimistic. We in many circumstances over-estimate the possibility of good things happening than bad things happening. it is as a result of the benefits that we hope to achieve in case the good thing happens (Bogacs, 2007, Mintz, 2003). when we know that we are likely to reap a lot of benefits from an event and we have all the rights and privileges to expect it to happen to us then we experience the valence effect or what is commonly referred to us wishful thinking.

In our case study, RBS as a company is presented with a letter inviting the company to participate in a tendering process by Linstaw. Maris and the marketing director are so excited.

They immediately organize for a board meeting to deliberate on several issues key among them the probability that RBS will get the contract, upon when the necessary arrangements and preparations of the bid can be made. The board members tend to be more biased when it comes to analyzing the companies that are most likely to win the tender. They put RBS on a more favored position despite the fact that the construction industry in Latvia is a very competitive industry with the supply outstripping the demand by a very wide gap.

The effect of this valence effect is the inability to see the negative or undesired possibility that is also likely to happen. As such, there is minimal consideration of the aspects of RBS as a company that can make them not get the tender. This causes some estimation errors and hurried decisions that can risk the financial position of the company. In this case, RBS foregoes all the other projects despite them being very important projects too and directs all their efforts to bid for the Linstaw tender.

When the board analyses the major players in the industry they come up with a general conclusion that. They have the financial capability, the right connections and they have a reputation of exceptional professionalism that sets them from the rest. I believe it will have been better for the board also to analyze and code all the factors that can play against them in winning the tender that way they will have made a well-informed decision rather than making a decision to go with the optimism and the fear to anger their board chairman, Maris, who believes this is the opportune time for RBS to become a major player in the industry and as such there should be no thoughts of not participating in the tendering process.


Vira. C, Haimes. Y, (2008), Multiobjective Decision Making: Theory and Methodology, dover Publications

Bogacs. R, (2007) , Optimal decision-making theories: linking neurobiology with behavior, trends in cognitivescience, [PDF] accessed online from

Kedia. B, Perez.L, (2002), International business decision making strategies, decision making theories, and leadership styles: An integrated framework, MCB UP ltd, Available online from 10.1108/eb046433

Mintz. A, Eds, (2003) Interactive Cognitive And Rational theories of Foreign Policy decision Making: advances in Foreign Policy Analysis, Palgrave Macmillan

Shane.F, (2005) , Cognitive Reflection and Decision Making, Vol.19 No.4, American Economic Association available onlne from

Reid.H, Dawes. R, (2009) Rational Choice in an Uncertain World: The Psychology of Judgement and Decision Making, SAGE

Martino. B, Kumaran. D, (2006) Frames, Biases, and Rational Decision-Making in the Human Brain, Science journal

Mellisa. L, Donald. G, (2005), Affect, Risk, and Decision-making, Health Psychology, article available online at 10.1037/0278-6133.24.4.S35

Glimcher. P, Ed., (2009), Neuroeconomcs: Decision Making and the Brain, Academic Press

Tindale.S, Kerr. N, (2003), Group Performance and Decision Making, Annual Review of Psychology Vol.55

Download full paperFile format: .doc, available for editing
Contact Us