Managers and Their Not-So Rational Decisions Harvard Case Solution & Analysis

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

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