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Explaining Biases in Decision Making (Doc)

   

Added on  2020-05-16

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Running head: EXPLANING BIASES IN DECISION MAKINGExplaining biases in decision-makingName of the UniversityName of the StudentAuthor note

1EXPLAINING BIASES IN DECISION MAKINGExecutive SummaryThe chief purpose of the report was to provide a critical evaluation of the concepts that explainbias in making decisions in an organizational context. The report was divided in two parts – Part1 and Part 2 - with Part 1 being an essay explaining the quote by Herbert Simon and Part 2 beingthe report giving examples of biases from real world application. Three concepts majorly,availability, bounded rationality and confirmation help explain biases in decision-making. Theseconcepts have been explained in Part 1 while Part 2 has provided a case study to analyze realworld situations where biases affect decision-making. The report concludes with an overallsummary of the findings and analysis and further suggestions into this field.

2EXPLAINING BIASES IN DECISION MAKINGTable of ContentsPart 1: Essay: Critical examination of three concepts explaining bias............................................3Introduction......................................................................................................................................3Explaining Simon’s quote................................................................................................................3Concepts explaining bias in decision-making.................................................................................5Conclusion.......................................................................................................................................6Part 2: Report: Case Study...............................................................................................................7Introduction......................................................................................................................................7Scenarios of decision making from real world................................................................................7Recognizing bias..............................................................................................................................8Methods by which bias may be measured or evaluated in the scenario..........................................9Strategies applied to overcome bias..............................................................................................10Conclusion.....................................................................................................................................11References......................................................................................................................................12

3EXPLAINING BIASES IN DECISION MAKINGPart 1: Essay: Critical examination of three concepts explaining biasIntroductionManagement and business demands managers to make decisions every day on a widerange of issues. Humans make decisions regularly and these decisions are influenced some or theother factor. These factors in addition are the results of the biases that affect the decision-making. Decision-making is a process that is continuous and has to be performed either with ownchoice or without. Maine, Soh and Dos Santos (2015), describe decision making as the rightchoice at the right time for achieving excellence in organizational management. According to Montibeller and Winterfeldt (2015), biases often hamper decision-makingthat further leads to failure of the organization. The author further points out different kinds ofbiases that include self-interest bias, social harmony bias, action-oriented bias and stability bias. The following essay, while introducing Herbert Simon’s quote, discusses three chiefconcepts that may help in explaining bias in decision-making. The essay elaborates Simon’sviews on rational human choices and the influences of external forces on these choices.Explaining Simon’s quote“The capacity of the human mind for formulating and solving complex problems is verysmall compared with the size of the problems whose solution is required for objectively rationalbehavior in the real world—or even for a reasonable approximation to such objective rationality”(Simon, 1957).In the above quote, Herbert Simon speaks about the limited capability of human mind tomake plans to solve complex problems. He states that the problems are bigger in size that thehuman mind capability to solve them. The solutions, states the author, are vital to humans asthese define rational behavior or even for roughly acquiring the rationality to make decisions.The above quote is cited as the ‘principle of bounded reality’. According to the author, limitedinformation restricts the rationality of individuals in decision-making. The limitations are notconfined to information only, these go beyond cognition and time. He explains that if theprinciple turns out to be true then the objective of classical economic theory cannot be attained.

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