Organizational Behavior Reading: Decision Making

This Reading argues that decision making is systematically flawed and introduces methods to improve decision-making effectiveness. The Essential Reading section covers the rational decision-making model and three important ideas that challenge it: Herbert Simon's concept of bounded rationality; Amos Tversky and Daniel Kahneman's work on heuristics and biases; and Keith Stanovich and Richard West's conceptualization of System 1 and System 2 thinking. The Reading then discusses seven common biases or heuristics, along with ways to mitigate them, and lists additional common biases to show the broad range of issues that can influence decision making. The authors also describe biases and additional decision-making challenges that are particular to groups. Finally, the Essential Reading draws on Richard Thaler and Cass Sunstein's concept of choice architecture to present a new framework for better decision making. The Reading includes two Supplemental Reading sections that deal with how motivation and emotion affect decisions, and how flawed decision-making processes can compromise ethics. The Reading also features two videos and one Interactive Illustration.