Institute for Research on Labor and Employment
The Psychological Basis of Quality Decision Making
- Author(s): Nemeth, Charlan Jeanne
- et al.
Effective strategic management requires analysis, decisions and actions by an organization to create and sustain competitive advantage. Gooddecisions are obviously desirable but whether the decision is good is a judgment call, often after the fact, and is itself subject to bias. What is less subject to debate is the process that leads to accuracy or quality decision making. This requires not just access to available information but proper processing, interpretation and integration of that data. Critical is the consideration of multiple options and perspectives at all stages and there are a myriad of reasons why people do not do that. Defective decisions come from poor information search, selective bias in processing the information, a lack of considering alternatives, a failure to examine the risks of the preferred choice and a rush to judgment (Janis and Mann 1977). In short, the selection, interpretation and integration of information is “biased”.
In this brief overview, we consider “bias” both at the individual and the group level. The overarching perspective is that there are psychological reasons that constrain and bias thought and there are also psychological antidotes that can improve it. The former are more numerous and well documented than the latter but in both individual and group decision making, the influences are predictable, pervasive and profound, leading at times to defective decision making and at other times to better and even creative decision making.