Managerial Decision Making

This article discusses the concepts that lead to biasness in decision making and provides strategies to overcome them. It also analyzes a case study to illustrate the development of biased decisions and how they can be avoided. Decision making is crucial for business growth, and avoiding bias can lead to better outcomes.

Running head: MANAGEMENT 1
Managerial Decision Making
Name
Institution
Author note………

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Table of Contents
Managerial Decision Making.................................................................................................................3
Introduction...........................................................................................................................................3
Part 1.....................................................................................................................................................3
Summary of Simons theory...................................................................................................................3
Critical Examination of Concepts That May Explain Bias in Decision Making........................................3
Concept One: Cognitive Bias..................................................................................................................4
Concept 2: Principle of Bounded Rationality.........................................................................................4
Concept 3: Judgement Heuristics..........................................................................................................5
Concept 4: Availability Heuristics..........................................................................................................5
Summary...............................................................................................................................................6
Conclusion.............................................................................................................................................6
References.............................................................................................................................................7
Part 2.....................................................................................................................................................8
Introduction...........................................................................................................................................8
Cognitive Decision Making....................................................................................................................8
Decision Making Scenario..................................................................................................................8
Bias Identified from The Case............................................................................................................9
Strategies to Overcome the Bias Scenario.........................................................................................9
How the Move Will Improve Decision Outcomes?............................................................................9
2. Principle of Bounded Rationality.......................................................................................................9
Case Description................................................................................................................................9
Bias Identified from The Case..........................................................................................................10
Strategies to Overcome the Bias Scenario.......................................................................................10
How the Move Will Improve Decision Outcomes?..........................................................................10
Heuristics.............................................................................................................................................10
Case description..............................................................................................................................10
Bias Identified from The Case..........................................................................................................11
Strategies to Overcome the Bias Scenario.......................................................................................11
How the Move Will Improve Decision Outcomes?..........................................................................11
Conclusion...........................................................................................................................................11
References...........................................................................................................................................12

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Managerial Decision Making
Introduction
Decision making is a vital attribute in our daily lives as it is linked to the development
of decisions on various aspects. According to Simon (1957), human being tend to develop
their decisions based on rationality, that is, they tend to study the failures and benefits that
may result from developing a given decision. He further described that the rationality is
curtailed by size of the problem that may overcome capacity of human beings in developing a
solution of the given problem. In addition to the size of the problem, time and cost may serve
as barriers to rational decision development where humans have limited information
concerning a situation and do not invest time in developing the required knowledge for
decision development. As a result, human beings are believed to develop biasness in their
decision-making owing to several mistakes developed during the decision-making process.
The paper develops a study on the concepts that lead to biasness in decision making. In
addition, to this study study, the paper analyses a case study of decision making to illustrate
how the decision are developed and how they can be avoided.
Part 1
Summary of Simons theory
The proponent of the theory of bounded rationality, Herbert Simon, argued that the nature of
human beings is to opt to go for satisfactory solutions with respect to their aspirations and
forego the optimum solutions which are based on rational techniques. Simon continued to
argue that human beings cannot possibly consider all the available alternatives and do the
analysis without employing biasness. Generally, the Simon’s theory states that human beings
are incapable of taking pure rational decisions since their decisions are influenced by diverse
factors. Lack of knowledge, cognitive limitations and time constrains constitutes the
parameters that affects rational decisions.
Critical Examination of Concepts That May Explain Bias
in Decision Making
Human beings develop decision making that are biased based on various mistakes.
There are various concepts that seek to describe the biasness developed in decision making.
Some of the concepts are discussed below.

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Concept One: Cognitive Bias
Cognitive bias is an error developed in decision making process that often influences
the way a human being thinks affecting his or her decisions and judgements in return.
Cognitive bias development is attributed to the level of remembrance of an event and to the
attention development to a given resource. The various factors may affect one’s way of
thinking and interpreting things. Cognitive biases can be attributed to emotions, pressures
exerted while thinking and limited time for decision development (Murata, et al, 2015).
Following the various challenges developed during decision making, the man kind is forced
to opt for a shortcut since it is considered to be tedious and time consuming to evaluate each
idea that is developed while thinking. The bias is developed as an adaptive behavior that
awakens a given reaction on the occurrence of a given event. Cognitive bias limits one’s
level of thinking which may result to biasness in the decision developed. There are various
types of cognitive bias which include confirmation bias. Confirmation bias develops decision
based on an already developed belief while ignoring factors that do not support the given
belief. Secondly, cogitative bias may include attention bias where an individual decides to
focus on a particular thing at the expense of the others. In addition, cognitive bias includes
an anchoring bias where an individual focus solely on the information they have during
development of judgements.
Concept 2: Principle of Bounded Rationality
Simon (1957) discussed that the capacity of human brain solving complex challenges
is very limited in relation to the solutions required to solve the problem at hand. As a result,
human beings are limited in their level of thinking that often affect their thinking capacities.
Following the limitation, global rationality has been questioned on several basis owing to the
fact that it fails to meet the standards required for decision development. According to Simon,
the global rationality is developed based on external constraints that is aimed at generating
benefit to the policy developer. Furthermore, the decisions developed are based on personal
beliefs that limit the extent of diversity in developing a solution to a problem. As a solution to
the identified problem, Simon advocated for breaking down of problems that are presented to
be solved at the global level so as to ensure that the problem solver develops rational
decisions based on his mind capacity (Barros, 2010). Following the incapability of solving
complex problems, people tend to develop focus on alternatives to the actual solution. The
decision developed is biased since it does not develop the maximum choice that is required to
solve the given challenge. Furthermore, the alternative strategy hinders the computation

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process that is necessary for development of well encompassed decision. Human mind
capacity finds it hard to undertake the computation process opting for alternatives that appear
to be easier. As a result, the judgement development is not ideal since it does not offer the
perfect solution to the problem as required.
Concept 3: Judgement Heuristics
Heuristics involves the simplification of judgement process to shorten the period for
making a decision. There are various types of heuristics based on the various types of
assumption made in decision development. The various types include, judgement heuristics
which are developed where individuals make assessment and probability at large. The
individual involved in decision making may use past knowledge to develop a decision based
on statistics and the way through which events takes place. The judgement developed from
this kind of assumption is prone to biasness since it is not based on real fact but on basic
assumption that may not be correct. Reliance on such assumption may result in errors and
diverse effects in relation to the situation at hand.
Concept 4: Availability Heuristics
Availability heuristics tend to develop on the rate of occurrence of events within a
given time of a period. The events can stick in the individual minds affecting their decision
development concerning given events. Among the factors that can contribute to development
of availability heuristics include excessive media coverage on a given topic that develops in
individuals mind affecting decision making related to the particular event (Cherry, 2018).
Similarly, individuals can develop beliefs on a given topic which affect their thinking. Also,
observance of activities taking place within ones surrounding affects their memory setting. In
return, the change in mind setting affect individual decision making. During the process of
decision-making, individuals often use the information about the particular events to develop
judgement to challenges. The mind setting serves as a shortcut to information interpretation
following the scarcity of time and resources for application in a deeper analysis of the
problem developed. Following the continued analysis of the problem or observation of a
particular activity, individuals tend to overestimate their existence and occurrence. Decisions
made based on availability heuristics is prone to biasness since it is developed on mere
beliefs that may not be right.
Other types of heuristics include, anchoring heuristic which entails overreliance of
one’s knowledge on a topic in development of decision concerning topics in the field of

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interest. Also, heuristics may include representative heuristic where the individuals develop
assumptions from an already taken information concerning a given topic. It serves as a
judgement shortcut developed based on prospects withheld by an individual. Inferior
heuristics include, affect, contagion, effort, fluency, recognition and simulation heuristics.
Summary
The discussion above has developed the various concepts that may result to poor
decision making. Decision making within a business determines the growth and development
of the business, more so, decisions developed by company managers on the running of the
business. Poor decision-making results to failure within the business system since there is no
justification for adoption of the given strategies. Similarly, decisions made on the presence of
factors promoting biasness may affect the company negatively owing to the errors developed
in the decision development. Companies should ensure accuracy of their decision
development systems by conducting detailed research on the information needed to develop a
judgement. In addition, individual decision development may be prone to biasness which
advocates for creation of a managerial team for developing company laws.
Conclusion
Decision development is a vital aspect in the development of a business since it is the
core of business development or failure. The development of decisions within business
setting should be made on relevant grounds, that is, businesses should avoid development of
decision based on belief and facts. In addition, businesses should consider conducting studies
in order to generate necessary information required for developing assumption over which
decisions can be developed. Furthermore, businesses can consider the enlargement of the
managerial team in order to ensure simplification of the problems being posed. The move
will ensure delivery of quality opinions since the various individuals within the team will
help solve given challenges. Lastly, companies should consider developing studies to their
managers to ensure that they develop necessary skills required in ensuring quality decision
making. The embracement of research based and computation decision will help the business
to develop competitive strategies that will help in ensuring the growth of the business. In
addition, research-based decision making helps the business to realize gaps within the market
field. The gaps will serve as opportunities for investment and expansion through the
application of various strategies developed from the research.

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References
Barros, G. (2010). Herbert A. Simon and the concept of rationality: Boundaries and
Procedures. Brazilian journal of political economy, 30(3), 455-472
Cherry, K. (2018). How the availability heuristic affects decision-making. Retrieved from
https://www.verywellmind.com/
Murata, A., Nakamura, T., and Karwowski, W. (2015). Influence of cognitive biases in
distorting decision making and leading to critical unfavorable incidents. Safety, 1, 44-
58
Simon, H. (1957). Models of man, social and rational: Mathematical essays on rational
human behavior in a social setting, New York: John Wiley and Sons

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Part 2
Introduction
Decision making is an important part of humankind lives. More so, decision making
is of much value to businesses since it defines the growth path of the business. In human life,
decision making is developed at personal level based on personal ideologies and the situation
being judged. In most scenarios, decision making is more of a risk since it involves
undergoing of a given thought in order to focus on the other. As a result, many people fear
the decision-making process following the fact that they might develop weak decisions or
might expose the company to a risk. To overcome the fear, individuals should develop a
study on the factors involved with good decision making. Among the key concepts to
consider during decision development include, create a contusive climate to develop your
thinking without disruptions, generate potential solutions to the problem, evaluate the various
solutions and figure out the best and lastly is to stick to the decision and communicate your
decision after which one can execute the decision made (Ahmed & Omutunde, 2012). Among
the various strategies developed, the evaluation is usually complex since it involves an
analysis of the level of risk posed by every potential decision. In addition, the process
includes measurements and computation to identify which decision best fits for a given
problem. The paper develops a study on the various ways through which people develop their
decision and where they develop biasness in the process. Furthermore, the paper will provide
recommendation to issues that can be applied to mitigate the biasness effect within decision
making process.
Cognitive Decision Making
Decision Making Scenario
Peter was admitted to hospital on Monday 30 June. Peter complained of severe
headache and stomachache as well. On reaching to the hospital, he was diagnosed by the
doctor on duty and was offered painkillers to ease the pain in the meanwhile. After the cross
examination the doctor recommended that the patient was to undergo a stomach operation
since he could have been suffering from a particular stomach infection. The surgery was
conducted upon the patient within the next few minutes. The doctor was so surprised upon
realizing that the patient had no stomach infections as earlier stated. Following the wrong
operation done, the patient collapsed and succumbed to death. The family members were
suspicious of the sudden death of their loved one and sought to identify the truth. The family
hired another doctor who was to perform a post mortem to Peter’s body before the burial. The

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doctor revealed that the patient was suffering from malaria but was receiving treatment for a
stomach disease. The doctor defined the act as an error in the medical field. The doctor who
had performed the operation was found guilty of professional negligence owing to poor
service delivery to his client.
Bias Identified from The Case
The doctor developed the decision on the patient illness to be stomach illness based
on his own knowledge as a doctor. The decision turned out to be bias since the patient was
suffering from malaria and later succumbed to death following the operation that was
conducted on him. The doctor should have conducted a research on the patient blood and
condition in order to identify the disease he was suffering from other than relying on his own
knowledge to identify Peter’s disease. The doctor portrayed cognitive decision making by
developing decision based on his own perceptions.
Strategies to Overcome the Bias Scenario
Relating to the above scenario, doctors should institute treatment on patients based on
adequate check up on the patient to identify their diseases. Following a thorough research on
the patient, the doctor will identify and recommend treatment for the right disease which the
patient is suffering from.
How the Move Will Improve Decision Outcomes?
The adoption of proper patient care will help lower the high patient death rates that
result from medical errors which is ranked as the sixth highest cause of death to patients
(Emergency Medicine, 2019). Also, the strategy will assure high quality service delivery
within the hospitals.
2. Principle of Bounded Rationality
Case Description
In a certain country, there was convened a leaders meeting and the topic of discussion
was to be development. Following the poor state of the country development system, the
leaders raised issues on what they would like to be done to improve the conditions, that is,
improve infrastructure, health, education among other development responsibilities bestowed
on to the government. A mathematician scholar who was also a leader proposed for
development of a model that would include all the required activities in a single file. the
model would also develop the time limit for the attainment of the developed strategies. In
addition, the model was to visualize a picture of the expected state of the nation after the
execution of the program. Lastly, the model would illustrate the necessary changes in relation

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to future developments and changes within the country. The proposal was advocated for by
other leaders. The development of the model was offered as a tender to a scholar who was
adequately learned. The scholar developed the model within a very short duration to the
amusement of the leaders who estimated it could have taken long to develop. However, the
model did not generate the expected results upon implementation and the government
demanded an explanation from the scholar. The scholar claimed to have developed an
alternative to the model other than building on the model itself. The act portrays bounded
rationality where human being mind focus on finding an alternative other than developing a
solution to the problem at hand.
Bias Identified from The Case
The scholar has been given the responsibility to develop a model for the development
of the country. On the contrary, the scholar develops an alternative to the intended model.
The act shows the restriction of human mind on performing new tasks more so new tasks and
difficult tasks. Human beings find it hard to find the solution to a problem and rather tend to
focus on adopting an alternative path that often result in errors.
Strategies to Overcome the Bias Scenario
Human beings should learn to apply their knowledge on finding solutions to
problems, that is, solving existing problems in the right manner. While focusing on the
scholar, he had the potential to develop the model but he developed the aspect of limited
brain in relation to the task offered. As a result of underutilization of skills, he ended up
developing errors in the model that would otherwise affect the country at large.
How the Move Will Improve Decision Outcomes?
The application of human skills to finding solutions to challenges affecting them will
assure that valid and existing results which will help solve the cited problems are generated.
Similarly, it will help develop a different generation that will aim at achieving the goals other
than alternatives.
Heuristics
Case description
A young man was walking home at night from the movies. On his way home, he
noticed that someone was following him. He found a stick and grabbed it on the way. He then
hid behind a nearby bush and waited for the person who was following him. Upon his arrival
near the bush, the young man ambushed him to the ground using the stick. After confirming

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who it was, the young realized it was his uncle who had been late for the night. The man felt
so sorry for his action which had caused injury to an innocent person.
Bias Identified from The Case
The man had set his mindset such that the moment anyone is on his back more so at
night, he or she must be a thief which was not the case. Following the misinterpretation, the
man hurt an innocent person who turned out to be his uncle based on his self-developed
belief.
Strategies to Overcome the Bias Scenario
The man could have engaged his mind to first confirm whether his imaginations were
correct and to analyze on what to do before hurting the uncle. The move calls for more time
application to decision development and to avoid making decisions on the basis of beliefs.
How the Move Will Improve Decision Outcomes?
The strategy will help improve the decision-making process where individuals will
develop decisions based on a number of factors other that on the dominant thought. In return
there will be less destruction developed on decision making since individuals will compare
upon the benefits and failures of a given decision before putting it into practice.
Conclusion
Decision making is a key factor in developing a conducive community environment.
Furthermore, proper decision making will help solve many challenges facing the society
through skills application in solution development. In addition, proper application of our
decision making will enhance development since decision will be developed based on the
positive results being developed. In general, proper decision making will assure in an era of
transformation within the society that will enhance development proper skill utilization.

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References
Ahmed, T. & Omotunde, H. (2012). Theories and strategies of good decision making.
International journal of scientific & technological research, 1(10), 51-54
Emergency Medicine. (2019). Episode 11: cognitive decision making and medical error.
Emergency medicine cases. Retrieved from https://emergencymedicinecases.com