Critical Thinking and Managerial Decision Making: Exploring Inductive Reasoning and Psychological Contrast

In this document we will discuss about Critical Thinking and Managerial Decision Making and below are the summary points of this document:- Critical thinking involves observation, evidence, and logic to find the truth of a situation. Critical thinkers possess skills such as questioning, evaluating arguments, and drawing conclusions. Inductive reasoning is a logical process used in situations involving prediction, behavior, and forecasting.

Running head: CRITICAL THINKING AND MANAGERIAL DECISION MAKING 1
Critical Thinking and Managerial Decision Making
Name
Institutions

CRITICAL THINKING AND MANAGERIAL DECISION MAKING 2
CRITICAL THINKING AND MANAGERIAL DECISION MAKING
Introduction
According to the class activities, critical thinking refers to the way individuals look at
situations and find the truth of the particular situation based on observation, evidence, and logic.
The critical thinking process involves the capability to look at a situation from a different point
of view in order to come up with the best solution. Applying the critical thinking process assist
individuals to make reasonable decisions with great confidence. Critical thinkers possess several
skills such as questioning thinks, do not rush to conclusions, are able to differentiate arguments
and against an issue, revise many perspectives before making a decision. However, for a person
to become a critical thinker, they should undergo various steps. The first step includes
recognizing assumptions. A critical thinker should differentiate facts from fictions and look for
alternatives viewpoints. A critical thinker should be able to evaluate arguments. This can be done
by looking critically at situations and analyze them objectively and accurately. The critical
thinker can then draw conclusions. The conclusion should be based on the information on belief
and information. Critical thinking is important in assisting an individual to make decisions. In
this essay, I will discuss the following concepts which I found important; inductive reasoning,
prospect theory, psychological contrast, and critical thinking process.
Inductive reasoning
I chose the inductive concept because it can assist me in establishing probability. On the
other hand, inductive reasoning gives me the chance to accept that I am wrong and I can only
determine that my premises are right through observation (Hanly, 2014). According to the unit
materials, inductive reasoning is a logical process in which both true and false thoughts and
premises are combined in order to come with a specific solution. This type of reasoning is most
used in situations that involve prediction, behavior, and forecasting (McAbee, Landis & Burke,
2017). Deductive reasoning starts by generalizing ideas and start applying it to specific incidents.
This type of reasoning can assist students in handling challenging problems. An example is you
are working on mathematics assignment, you will have to reason inductively before coming to an
alternate solution. Example, if john selling tickets for the school play. She sold 20 more adult
tickets than children ticket and he sold twice as many senior tickets as children. If I am told to

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solve such a solution, I will have to reason inductively by looking at the general view of the idea
before breaking down the concept.
After I have analyzed the idea, I will narrow down by letting a certain number like y to
represent the number of tickets that John sold and then write down an expression representing
the number of adult tickets sold. I will be able to work on the sum effectively after narrowing
down. Inductive reasoning is also important in the workplace. I can use inductive reasoning by
advertising the company’s products. Inductive reasoning gives the outlook of a scenario before
coming to the real scenario (Mulnix, 2012). Therefore, it is important for convincing customers.
After learning the inductive reasoning topic, I have gained a lot. I have noted that I always
question my thoughts which is an excellent skill for carrying inductive reasoning. Despite that, I
need to improve when it comes to making decisions. According to my disc analysis, I am an
emotional person and sometimes I run to a conclusion without evaluating the skills. Therefore,
inductive reasoning will assist me to avoid making irrational decisions. At some point, I have
regretted the decision I made.
Deductive reasoning
I chose the deductive reasoning concept because it will assist me to be part of the
decisions making. This type of reasoning may assist me to come up with decisions during
arguments since it provides a guideline to present factual evidence. Deductive reasoning is the
type of thinking that starts with a hypothesis statement and then uses the statement to reach a
particular logical conclusion (Dogramaci, 2015). The difference between this type of reasoning
and inductive reasoning is that deductive draws a conclusion based on valid premises. If the
premises are true, the conclusion will also be true. However, inductive reasoning depends on
premises that are not confirmed (Novaes, 2013). Deductive reasoning may assist me to come up
with a correct decision since I can only make a positive conclusion if the premise is positive.
Therefore, it will reduce the possibility of making the wrong decisions. Example, if I was a work
at a supermarket, I may use deductive to increase the sales of candy. Since people do impulse
buying of candies, I would place then at the display or the cashiers' place and people will buy as
they leave the supermarket or with the little balance that remains with after making their
purchases.

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The premise that people impulse buy candies is true, therefore, the idea of sales
increasing by placing candies at the display is relatively true (Johnson-Laird, Khemlani &
Goodwin, 2015). The unit activities have assisted me to understand that the random decisions
that make sometimes are based on deductive reasoning. I make decisions but I have never known
that I was following a certain form of reasoning. Moreover, I have learned that I have good
evaluation skills. That is the ability to evaluate the effectiveness of a situation. Through the
course activities, I have learned that I lack good executive skills that are important in
coordinating skills in that may assist me in building new cognitive structures and thought of the
process. Therefore, I need to effectively develop my executive skills in order to reason
deductively.
Prospect theory
This theory presents an important concept to me because it may assist me to make
decisions between alternatives that involve uncertainty and risk. They weigh the probability of
losses and gains. People dislike losses and take risks in order to avoid losses. This theory may
influence my personal decisions in several ways (Bocquého, Jacquet & Reynaud, 2013). Since I
fear to fail in my exams then I will have to take the risk of waking up very in the morning and
spending extra hours in the library so that I may pass my exams. On the other, if I was an
employee in a certain organization, I will apply the three biases gained from the prospect theory
to make decisions. The first bias that will use is uncertainty. I will weigh the options that seem to
be certain and weigh those that possess risks. This will increase the employees’ performance
since people tend to accept smaller but certain reward than a mere chance at a larger gain.
Therefore, I will offer rewards to those who perform well in their duties (Kaddoura, 2013). I will
be certain that the employees’ will work hard because they will be sure that in the end, their
efforts will be rewarded.
The first bias that will use is the isolation effect. This refers to disregarding any
components that are common to both options (Jiang & Yang, 2015). This means that, if I am the
manager of the organization, I will focus on the behaviors or factors that are affecting the
organization’s operation instead of focusing on strengthening the factors that are contributing to
the success of the company. This type of decision will assist me to do away with negative factors

CRITICAL THINKING AND MANAGERIAL DECISION MAKING 5
affecting the company. Moreover, I will also apply the loss aversion bias in making the
company’s decision. This type of bias will assist me as the manager to minimize the losses
threaten the organization even if the probability of the losses is very minimal. Example, in a
gambling game, gaining $200 and losing $ 100 feels like a big lose although you are far by $100.
Therefore, I can apply this theory by convincing the employees to take action that will minimize
losses by strictly following the laid down rules. Through the unit activities, I have learned that
sometimes I make a decision without considering the negative effects or weighing both negative
sides. Example, I may only have $500 and go out with my friends and spent all the money
without considering that I might have an emergency that may require me to use money. Through
the unit activities, I have learned that I lack the skills to plan for the future. The unit activities
have assisted to understand how I may handle different workplace situation using the prospect
theory. I am a systematic person, I will use the prospect theory and the skill to be able to make
future decisions. Moreover, as per my disc analysis, I am a risk taker, this theory will assist me to
gain confidence and venture risk but profitable businesses.
Critical thinking process
Critical thinking refers to the process sell disciplined thinking which attempts to reason at
the highest level quality in a fair-minded way. The concept of critical thinking is important to me
because it enhances my presentation skills and language (Glöckner & Pachur, 2012). Moreover,
through thinking critically, I will improve on the way I express my ideas. Critical thinking
process follows six effective styles. The first step is organizing information. An individual
should select information and structure it appropriately (Victor-Chmil, 2013). The information
can be drawn from the internet, picture, and through observation which links to the topic at hand.
The second step is to structure the reasoning. This is where an individual provides evidence or
support material for their view (Young, et al., 2012). The third stage is considering the evidence.
This is where an individual considered how effective or good their evidence is. The fourth stage
is identifying arguments. A person can identify arguments by looking at the logical structure of
the argument to ensure it is well formed. The fifth stage is evaluating augments. An individual
should evaluate both arguments for and against. The sixth stage is communicating the
conclusion. Once the evaluation has been made about the topic, the idea should be presented
orally or in black and white distinguishing the average and good results. The critical decision

CRITICAL THINKING AND MANAGERIAL DECISION MAKING 6
making concept has assisted me to critically evaluate situations, weight both positive and
negative effects before making a decision (Krohling & de Souza, 2012). There have been cases
where I have encountered personal dilemma in deciding which activity I should prioritize,
however, I have always applied the critical decision-making process which has assisted me to
come up with a viable decision. The unit material has helped to realize that I lack the connecting
skill of critical thinking. This is the main area that I need improvement in order to be a good
critical thinker. The connecting skill will assist me to make connections between related pieces
and item of information to come up with reasonable decisions. According to my disc analysis,
my deal work environment involves a work culture that provides opportunities for challenges
and complex problem-solving. Therefore, the critical thinking process will assist me to come up
with solutions for complex and challenges situations.
Psychological contrast
Psychological contrast is important since it may assist me to distinguish objects from
each other. On the other hand, it will assist have self-control strategies (Lub, et al., 2012).
Psychological contrast is important in assisting me to improve my health and more exercise. As
per my disc analysis, I reduce my work efforts when I am under pressure (Festing & Schäfer,
2014). With the help of the psychological contrast, I will be able to understand how to work
under pressure (Erkutlu & Chafra, 2013). The unit activities about psychological contrast have
helped me to understand that I respond slowly to the situation when I work under pressure.
Besides, I am resistant to change. This means that in need to improve on how to resound to
changes through getting the assurance that everything will be okay. I also need to understand that
changes will always be there and I should embrace positive changes.
Conclusion
Critical thinking, prospect theory, psychological contrast, inductive reasoning and
deductive reasoning are important concepts in decision making. The five concepts would assist
me making professional, personal, interpersonal decision making. The inductive concept because
it can assist me in establishing probability. Deductive reasoning concept because it would assist
me to be part of the decisions making. On the other hand, the prospect theory would assist me to
make decisions between alternatives that involve uncertainty and risk. Moreover, psychological

CRITICAL THINKING AND MANAGERIAL DECISION MAKING 7
contrast is important since it would assist me to distinguish objects from each other. The critical
thinking process would assist in making challenging decisions and also improve my decisions
making process.

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