Is It Individual Decision Making Is An Irrational Process?

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I agree with the above statement that for the most part, individual decision making in organizations is an irrational process. First, the rational decision-making process includes the following steps:

Define the problem
Indentify the decision criteria
Allocate weights to the criteria
Develop the alternatives
Evaluate the alternatives
Select the best alternatives
Do managers follow this process or are they beset with problems that prevent them from following the rational decision-making process? The text provides quite a bit of evidence that would preclude the organizational manager from making decisions in a rational way as follows:

Bounded Rationality: This is where people respond to complex problems by reducing them to levels at which they can readily understand it. This lends to compromising the ability to define the problem and identify the decision criteria, correctly (Robbins, p. 149).  

Intuition: This is a nonconscious process created from distilled experience. It is not a rational process, yet is used extensively by decision makers (Robbins, p. 149).

Overconfidence Bias: This is a major problem in the decision making process where the decision makers are overconfident in their ability to make the right decision. Here the tendency is to not fully develop alternatives, nor identify criteria, nor evaluate those alternatives (Robbins, p. 150).

Anchoring Bias: This is a tendency to fixate on initial information and fail to adequately adjust for subsequent information (Robbins, p. 150-151).

Confirmation Bias: This is where information is not gathered objectively. It is gathered selectively. Information is selected that confirms predetermined choices. This does not follow the rational process (Robbins, p. 151).

Availability Bias: This is where people have the tendency to base their judgments on information that is readily available. This bias is emotionally charged, vivid, and emphasizes the most recent information. Again not part of the rational process of objectively gathering information (Robbins, p. 151).

Escalation of Commitment: This refers to staying with a decision even when there is clear evidence it is wrong. This is where decision makers don’t want to admit that they may have been wrong – not rational (Robbins, p. 151-152).

Raness Error: This is where one believes he can predict outcomes from random events – not rational (Robbins, p. 152).

Winner’s Curse: This is where a winner overestimates the value of information he/she gets (wins) – not an unbiased perception of important decision making information (Robbins, p. 153).

Hindsight Bias: This is the tendency to believe falsely, after the outcome of an event is actually known, that outcomes would have been accurately predicted – not rational or consistent (Robbins, p. 153).

In addition to these biases and errors, the organization adds constraints to decision makers that create additional deviations from the rational model:

Performance Evaluation: This is where decision makers are influenced by the way they are evaluated. Decisions are made that are consistent with getting positive evaluations and not using the rational process. (Robbins, p. 155).

Reward Systems: This is where the organization’s reward system influences decision makers by making them biased to options that will line their pockets – not rational or objective (Robbins, p. 155).

Formal Regulations: This is where rules and regulations are making the decisions or limiting the decision makers – not the rational process (Robbins, p. 155).

System-Imposed Time Constraints: This is where deadlines force quick decisions and limit adequate research to define the problem, fully vet the criteria and alternatives – not the rational process (Robbins, p. 156).

Historical Precedents: This is where previous commitments constrain the current options and therefore circumvent the rational process (Robbins, p. 156).

For all of the above reasons I agree with the statement that for the most part, individual decision making in organizations is an irrational process.

Work cited:

Robbins, S. & Judge, T. (2009). Organizational Behavior (13th ed.). Upper Saddle River, New Jersey: Pearson Education, Inc.

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