The paper "Managerial Decision-Making" is an outstanding example of management coursework. Every day, business people are inundated with decisions, either big or small. Understanding the way people arrive at decisions is a section of cognitive psychology that over the years has received attention from scholars. Theories have been developed to explain how individuals make these decisions and what factors impact decision making. Decisions require a choice to be made among various alternatives and often, the choice selected is only based on judgment (Chugh and Bazerman, 2007). On the other hand, this judgment relies heavily on a cognitive evaluation on the basis of interpretations of aspects such as facts, evidence and opinions.
For a number of reasons, interpretation always varies from one person to another. For this reason, different types of heuristics were developed to give people a general guide in decision making in order to reduce the efforts needed in making decisions. Thus, heuristics and factors that impact decision making are a fundamental aspect of critical thinking in decision-making. There are various concepts that influence decision making. This paper will highlight four discrete concepts explained in Simon’ s quote that discusses bias in decision-making.
From the quote highlighted by Simon, four discrete concepts that explain bias that occurs during decision making are seen. “ The capacity of the human mind for formulating and solving complex problems is very small compared with the size of the problems whose solution is required for objectively rational behavior in the real world— or even for a reasonable approximation to such objective rationality” (Simon, 1957,p. 198). These concepts include bounded awareness, rationality and emotional biases, escalation of commitment and fairness and equality.
Bounded awareness is a concept that was described by Bazerman and Chugh based on the observation that people sometimes overlook significant information when making decisions (Chugh and Bazerman, 2007). One cause of bounded awareness is the tendency to become over focussed. It is noted that focus often limits awareness and may cause important information to be missed.
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