Cognitive Biases in Decision Making in Post-Bureaucratic Organizations

Cognitive Biases in Decision Making in Post-Bureaucratic Organizations

Marie-Therese Claes (Catholic University Louvain, Belgium) and Thibault Jacquemin (Catholic University Louvain, Belgium)
Copyright: © 2017 |Pages: 25
DOI: 10.4018/978-1-5225-1983-6.ch017

Abstract

In today's post-bureaucratic organization, where decision-making is decentralized, most managers are confronted with highly complex situations where time-constraint and availability of information makes the decision-making process essential. Studies show that a great amount of decisions are not taken after a rational decision-making process but rather rely on instinct, emotion or quickly processed information. After briefly describing the journey of thoughts from Rational Choice Theory to the emergence of Behavioral Economics, this chapter will elaborate on the mechanisms that are at play in decision-making in an attempt to understand the root causes of cognitive biases, using the theory of Kahneman's (2011) System 1 and System 2. It will discuss the linkage between the complexity of decision-making and post-bureaucratic organization.
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Background

The evolution of the ideas regarding the human decision-maker reveals why researchers developed behavioral economics, and helps to understand the rise of the importance of cognitive biases. The ideas of the 17th century are far-gone but they are essential to understand the evolution of the field of decision-making.

In the 17th century, Descartes developed the Cartesian model of rationality which describes how human reasoning is and should be logical. He assumed that our reasoning is conscious and deliberate. Influenced by Descartes, Leibniz imagined a mathematical model for decision-making in 1677 that would lead all reasonable persons using it to a same conclusion. His idea was to create characteristic numbers for all ideas. Disputes would be reduced to computations involving those numbers. Abandoning all subjectivity in decision-making, his model would eradicate all never-ending disputes.

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