Corporate environment today requires managers to be excellent decision makers. Their ability to make fast, widely supported, and effective solutions will be, for the most part, to form in the performance of their firms. In this article, we describe two cognitive systems that influence decision making. System 1 refers to a process that is fast, easy and intuitive. System 2 is slow, controlled, and rule-making decisions. Both are important for a wide range of administrative decisions, and they interact with each other. There is, however, a number of forces that hinder the effectiveness of these processes. For example, we know from the theory of perspective that managers do not want to bear the loss, so they often make irrational decisions based on a small chance that they could avoid such losses. Another example, the escalation of commitment, explains why managers can continue to allocate resources unsuccessful projects. We describe these and other biases in order to help managers better understand the problems of decision-making and improve them. "Hide
by Travis C. Certo, Brian L. Connelly, Laszlo Tihanyi Source: Business Horizons 7 pages. Publication Date: March 1, 2008. Prod. #: BH269-PDF-ENG
Related Case Solutions & Analyses:
Procter & Gamble: Organization 2005 (A)
Strategy in the 21st Century Pharmaceutical Industry: Merck & Co. and Pfizer Inc.
Visioning Information Technology at Cirque du Soleil
Language and Globalization: Englishnization at Rakuten
Organizational Reward Systems
Asda: An Interview with Archie Norman and Allan Leighton April 1998 Video
Rocky Mountain Chocolate Factory
Block 16: Ecuadorian Government’s Perspective, Spanish Version
Wildfire Entertainment: Organizational Structure Archetypes
Stress and the City (B): António Horta-Osório, CEO of Lloyds Banking Group
