Common Biases in Managerial Decision Making

Common Biases in Managerial Decision Making
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Common Biases in Managerial Decision Making
Business executives or managers are expected to make proper decisions to facilitate the smooth running of an organization’s operations. However, the environment for decision-making is not always conducive and might have uncertainties. In that light, managers should learn how to make an effective decision during uncertainties to secure the future of their companies.
Selim Aren and Hatice Nayman Hamamci focus on five primary biases that can influence managerial decision-making. They include anchoring, overconfidence, availability, hindsight, and status quo. In particular, overconfidence entails the difference between individuals’ values based on their ability and knowledge and the actual situation (Aren & Hamamci, 2021). If the difference is high, the person is said to be overconfident, which might lead to ignorance or the failure to admit when mistakes occur. Additionally, the status quo is one’s preference to remain in the current situation despite having multiple alternatives. This bias makes managers fail to make the right decisions, particularly during uncertainties.
Anchoring involves making decisions by adhering to a specific va...