Managerial Decision-Making Application Essay: Simon's Quote Analysis

This essay critically examines three discrete concepts related to bias in decision-making, referencing Simon's quote about the limits of human rationality. It explores overconfidence, heuristics, and bounded awareness. The essay delves into overconfidence, including overestimation and overplacement biases, and provides examples. It discusses the efficiency of heuristics as mental shortcuts and outlines biases associated with availability, representativeness, and confirmation. The essay also defines bounded awareness, examining its impact on decision-making through inattentional and change blindness, and the focusing illusion. The content includes practical examples to illustrate the discussed concepts, aiming to provide a comprehensive understanding of the factors influencing managerial decisions. The essay follows an essay format, with an introduction, discussion, conclusion, and references, adhering to APA style guidelines.

Running head: DECISION-MAKING APPLICATION
Managerial Decision-Making
BUMGT5980
Name of the Author
Name of the University:

1DECISION-MAKING APPLICATION
Contents
Introduction................................................................................................................................2
Discussion..................................................................................................................................2
Conclusion..................................................................................................................................5
References..................................................................................................................................6

2DECISION-MAKING APPLICATION
Introduction
The goal of the classical theory is to predict the behaviour of rational individuals
without making any type of empirical investigations associated with psychological properties.
This can be related to the concept of bounded rationality and thus it will help in building the
concept of a simplified model. This will help in dealing with complex situations and thus it is
associated with real-world examples. It has been found that human beings must behave
rationally in relation to the model and the behaviour must be approximate in relation to the
optimal world. It has been found that the need for administrative theory will make it easier to
handle the practical limits associated with rationality and these limits must not be considered
as static processes. The organisation environment assists in the decision-making process and
thus it is the responsibility of the individuals to handle the entire thing accordingly. Human
beings are found to have limited knowledge and the organisations are considered as special
instruments in order to achieve human purpose (Short et al., 2016). Further, it has been found
that it is the responsibility of the individuals involved in the administrative work to
communicate the information and thus retain knowledge in order to handle the level of
information. The amount of information that can be acquired by the individuals in order to
retain and acquire the information is determined by the social and the other related
organisational forces (Simon et al., 2019). This will assist in the modification of possibilities
and thus there are different types of relaxing limits that are considered to be the vital
components in the rational calculation process. The choice of the individuals is most likely to
take place in such an environment where the premises are accepted as the subject of choice of
the individuals (Li et al., 2014). This essay will highlight the three discrete concepts
associated with Simon’s quote along with the theories and practical examples
Discussion
Decision Making: Overconfidence
The bias arising from overconfidence is considered to be a natural state of human
beings. It has been found that the inherent base of overconfidence will help an individual to
project one’s own belief and thus handle one’s future accordingly. This form of bias also
leads to poor decision-making ability. The managers who are involved in the different
managerial roles must try to watch overconfidence as a bias in trying to solve or handle the
problem that is not within their area of expertise (Bolinger, 2017). Further, it has been found
that the bias arising from overconfidence can be regarded as insidious as there are different

3DECISION-MAKING APPLICATION
types of factors associated with it in order to inflate or create a particular situation. It has been
found that overconfidence lays some important consequences and thus it assists an individual
to handle the learning aspects adequately. The health and the financial decisions can be
managed by the people adequately and thus it will be easier to handle the learning process
(Lunenburg, 2010). The theory of distorted self-assessment has tried to establish a link
between confidence and intelligence. It has been found that there are some individuals who
try to handle the incremental view of intelligence that is generally characterised through
proper belief and thus it can be developed over the passage of time. On the other hand, to
predict the belief of the individuals, there should be openness to negative information. The
incremental theorists believe that it is easy to handle the intelligence leads in order to manage
the learning goals and thus improve the ability (Zhang et al., 2015). The orientation towards
the learning process will help in the maintenance of positive views and thus it can be
compared with difficulty and effort. It is necessary to examine the biased pattern of attention
so as to handle the over-confident self-assessment aspects in a better way. The entity theorists
also suggest that the difficult aspects of the task can be managed and thus it will be easier to
provide attention to the task through improved ways (Orquin & Loose, 2013). An example of
overconfidence is the way through which the person will think about his sense of direction
than it is actually. In such a case, the person might show overconfidence by going for a long
journey without any map and hesitating to ask for directions to some other person even
though he/she knows that they are moving in the wrong direction.
Biases and Heuristics
A heuristic can be regarded as the mental shortcut that helps the individuals to solve
the problem and thus carry out judgements efficiently as well as quickly. This helps in
shortening the decision-making process and thus it allows us to function efficiently and
effectively. Heuristics also plays a vital role in decision making and problem-solving
(Quiggin, 2016). As the world is full of information, it will assist to speed up the decision-
making process efficiently and through better means. The heuristics assist in the reduction of
effort, making fast and frugal decisions as well as to substitute attributes accordingly. Further,
it can be said that in order to manage the information, it is vital to encounter and speed up the
decision-making process and this is possible with the help of mental strategies that have the
capacity to analyse every aspect in detail (Ehrlinger et al., 2016).

4DECISION-MAKING APPLICATION
Laplace’s theory of cognitive illusion, heuristics, as well as biases, can be cited in
this case. This is considered to be an important approach in the decision making and
judgement theory and thus the theory highlights that illusion has probabilities and thus it can
be managed accordingly (Uddin & Rakib, 2017). Further, it can be seen that Laplace’s theory
also provided a clearer picture of the biases and heuristics and therefore, it is vital to check
that there is mixture of heuristics in order to handle the flaws in humans nature. The theory is
also considered to be a combination of the observation and it highlights the incoherence in
the fact that human beings can be regarded as rational actors for the incorporation of the
universal ideas in the long run (Merten et al., 2016).
A practical example of heuristics can be cited when an individual tries to ride the bus
or drive it for going to work. In such a situation, it can be seen that the individual might
suddenly remember that there is road construction along the national highway and thus it
might be difficult to take the standard bus route (Bazerman & Sezer, 2016). Therefore, it is
the responsibility of the individual to realize that the bus might slow down and thus the
individual might be late for going to work and hence find an alternative route in such a
situation.
Bounded awareness
Bounded awareness is considered to be a vital phenomenon through which an
individual might use different types of psychological processes that leads to the same form of
error such as the failure to see, use, seek as well as share important information that is shared,
seen, used or shared easily (Henry & Thompson, 2017). This also assists an individual to
prevent a higher level of fraud in the organisational decision-making process. It is the
responsibility of the psychologists to check whether bounded awareness leads to different
types of unethical behaviour and how it can be controlled against different types of cognitive
failure. This is likely to affect cognition and the motivation and thus it might assist in the
higher promotion activities of the individuals (Zhang & Cueto, 2017).
The naturalistic decision-making theory helps in providing the framework as to
how the individuals should take the decisions in the complex world in the best possible way.
It also assists in the identification of the proper cues for the organisational decision-making
process. It is important to check that there is a synthesis of better experiences and this will
make it better to handle the situations. Further, it can be said that the static notion of handling
the similar levels of experiences will help the individuals to shape the events in the correct

5DECISION-MAKING APPLICATION
possible way. It will also help in handling the events and thus good decisions can be taken
without making any further comparisons (Gigerenzer, 2016).
A practical example of bounded awareness is to check the distraction of the drivers
using cell phones. This is attributed to different car accidents because in most cases, it is
generally seen that the drivers are distracted and thus they overlook the details when they are
not phone. Therefore, it can be seen that most of the accidents take place due to carelessness
of the drivers.
Conclusion
Therefore, it can be concluded that the goal of satisfaction in finding out the course of
action is the most vital aspect of Simon’s theory. It is necessary to check how the individuals
make consistency as well as complete orderings of the different types of attributes in the
decision-making process. The effective solution, in this case, is the substitution of the goals
and the sacrifice of the individuals in order to handle the decision adequately and properly.
Therefore, the bounded rational human choice assists in the decision making and the
problem-solving aspects of the individuals.

6DECISION-MAKING APPLICATION
References
Bazerman, M. H., & Sezer, O. (2016). Bounded awareness: Implications for ethical decision
making. Organizational Behavior and Human Decision Processes, 136, 95-105.
Bolinger, R. J. (2017). Reasonable mistakes and regulative norms: Racial bias in defensive
harm. Journal of Political Philosophy, 25(2), 196-217.
Ehrlinger, J., Mitchum, A. L., & Dweck, C. S. (2016). Understanding overconfidence:
Theories of intelligence, preferential attention, and distorted self-assessment. Journal
of Experimental Social Psychology, 63, 94-100.
Gigerenzer, G. (2016). Towards a rational theory of heuristics. In minds, models and
milieux (pp. 34-59). Palgrave Macmillan, London.
Henry, A., & Thompson, E. (2017). Witnessing from here: Self-awareness from a bodily
versus embodied perspective.
Li, Y., Ashkanasy, N. M., & Ahlstrom, D. (2014). The rationality of emotions: A hybrid
process model of decision-making under uncertainty. Asia Pacific Journal of
Management, 31(1), 293-308.
Lunenburg, F. C. (2010, September). The Decision Making Process. In National Forum of
Educational Administration & Supervision Journal (Vol. 27, No. 4).
Merten, T., Merckelbach, H., Giger, P., & Stevens, A. (2016). The Self-Report Symptom
Inventory (SRSI): A new instrument for the assessment of distorted symptom
endorsement. Psychological injury and law, 9(2), 102-111.
Orquin, J. L., & Loose, S. M. (2013). Attention and choice: A review on eye movements in
decision making. Acta psychologica, 144(1), 190-206.
Quiggin, J. (2016). The value of information and the value of awareness. Theory and
Decision, 80(2), 167-185.
Short, J. L., Toffel, M. W., & Hugill, A. R. (2016). Monitoring global supply
chains. Strategic Management Journal, 37(9), 1878-1897.
Simon, N. W., Gilbert, R. J., Mayse, J. D., Bizon, J. L., & Setlow, B. (2009). Balancing risk
and reward: a rat model of risky decision
making. Neuropsychopharmacology, 34(10), 2208.

7DECISION-MAKING APPLICATION
Uddin, I., & Rakib, A. (2017, June). A preference-based application framework for resource-
bounded context-aware agents. In International conference on mobile and wireless
technology (pp. 187-196). Springer, Singapore.
Zhang, S. X., & Cueto, J. (2017). The study of bias in entrepreneurship. Entrepreneurship
theory and Practice, 41(3), 419-454.
Zhang, T., Fletcher, P. O., Gino, F., & Bazerman, M. H. (2015). Reducing bounded
ethicality: How to help individuals notice and avoid unethical behavior.