Decision-Making Biases and Pitfalls

Full Answer Section

     

Decision 1: Resource Allocation

Decision: The decision to allocate a disproportionate amount of the department's budget to a specific project, despite the existence of other high-priority initiatives.

Bias: Sunk cost fallacy. The supervisor had invested significant time and energy into the initial stages of this project, leading to an overcommitment and reluctance to reallocate resources.

• Bolland and Fletcher discuss how the sunk cost fallacy can cloud judgment and lead to irrational decision-making. In this case, the supervisor's previous investment in the project influenced their decision to continue allocating resources, even in the face of diminishing returns.

Decision 2: Personnel Management

Decision: Promoting an employee based primarily on seniority rather than performance or potential.

Bias: Anchoring bias. The supervisor relied heavily on the employee's tenure within the organization as a primary factor in the promotion decision, neglecting to consider other relevant performance indicators.

• Kourdi emphasizes the importance of avoiding anchoring biases, which occur when decision-makers rely too heavily on initial information. In this case, the employee's seniority became the anchor, overshadowing other important criteria.

Decision 3: Project Prioritization

Decision: Prioritizing a project based solely on its potential for high visibility and public recognition, rather than its strategic alignment with organizational goals.

Bias: Availability heuristic. The supervisor focused on easily retrievable information – the potential for high-profile recognition – rather than conducting a thorough analysis of the project's overall impact.

• Hammond, Keeney, and Raiffa discuss the availability heuristic as a cognitive bias that influences decision-making based on readily available information. In this case, the potential for public acclaim overshadowed a more comprehensive evaluation of the project's merits.

Conclusion

Understanding decision-making biases is crucial for improving organizational effectiveness. Among the three frameworks, Hammond, Keeney, and Raiffa's book, "Smart Choices," provides a particularly practical and actionable approach to decision-making. It offers a structured framework for identifying and mitigating biases, which would be invaluable for my supervisor. By applying the concepts outlined in this book, my supervisor can enhance their decision-making abilities, leading to more informed and effective choices.

 

Sample Solution

    Supervisory decision-making significantly impacts organizational outcomes. This paper analyzes three instances where my supervisor's decisions were influenced by potential biases, drawing on insights from Bolland and Fletcher (2012), Kourdi (2003), and Hammond, Keeney, and Raiffa (2008).