Question

Explain in your pwn words why managers in organizational practice often have cognitive biases when it comes to decision-making ( bounded rationality) you can use the online simulation as an example

Answer 1

· Decision making is a very responsible task. Apart from being a critical exercise, it has long lasting impact on decision maker as well as decision bearer.

· In an organizational setting, managers often have cognitive biases for decision-making because it ensures that decisions are rational and can be justified with facts.

· Cognitive basis gives manager’s ability to process all the relevant information so that rational decisions can be made.

· Cognitive basis gives through understanding about the factors that impact decision.

· It ensures that mangers are fully informed and there are minimal or no confirmation bias, relationship and process conflict.

· Example: Suppose there is a manager who has to select between two competing software packages that the organization will implement and utilize on a daily basis for enhancing efficiency of operations.

· Before making a decision, manager will highlight several criteria like cost, brand, post-sale services, ease of adaptation, and duration of implementing change etc. before selecting the new software. Rather than going with the flow and making decisions under influence of brand or other irrelevant factors

· Such cognitive basis will ensure that the decision made was rational, justified, relevant and in best interest of organization.