Please, write about two pages with references.

Organizational Decision-Making is defined as the process of responding to a problem by searching for and selecting a solution/course of action that will create the most value for organizational stakeholders.

The rational model of decision-making outlines how decision-making takes place when there is no uncertainty. It ignores the effects of information costs and managerial costs. Newer models of decision-making recognize the effects of uncertainty, information, bounded rationality, satisficing, and bargaining by coalitions on the decision-making process. The Carnegie, incrementalist, unstructured, and garbage-can models provide a more realistic picture of how organizational decision-making takes place.

Within the Carnegie Model of decision-making, Bounded rationality is described as follows: Managers are restricted by bounded rationality, a limited ability to process information. Managers improve decision-making by strengthening analytical skills and using computers. The Carnegie model recognizes that decision-making is subjective, and that decision-making quality depends on managers prior experience, knowledge, beliefs, and intuition.

Organizational Learning and Cognitive Structures

When managers confront a problem, their cognitive structures shape their interpretation of the information at hand. That interpretation might be distorted or wrong because of the operation of cognitive biases.

Types of Cognitive Biases

Cognitive biases refer to factors that systematically bias cognitive structures and affect organizational learning and decision-making.

Cognitive dissonance is the state of discomfort or anxiety that a person feels when there is any inconsistency between his or her beliefs and actions. Managers seek or interpret information that confirms and reinforces their beliefs, and they ignore information that does not.

The illusion of control is a cognitive bias that leads managers to overestimate the extent to which they can control a situation because they have the skills and abilities needed to manage uncertainty and complexity. The more managers perceive they can control a situation, the more likely is the cognitive bias known as the illusion of control to arise. In uncertain situations in which their ability and competence are really being tested, managers may develop irrational beliefs about their personal ability to manage uncertainty. Frequently, when top managers lose control, they move to centralize more authority, in the mistaken belief that this will give them greater control and allow them to solve their problems.

Frequency is a cognitive bias that deceives people into assuming that extreme instances of a phenomenon are more prevalent than they really are. If one batch of supplies is defective, a firm assumes that all supplies are defective. This bias leads to vertical integration to ensure quality.

Representativeness is a cognitive bias that leads managers to form judgments based on small and unrepresentative samples. A company receives a few international orders and launches global expansion. Frequency and representative biases can also work in the opposite direction. A bad decision can be made because top managers overgeneralize from a limited range of knowledge and experience.

Projection is a cognitive bias that allows managers to justify and reinforce their own preferences and values by attributing them to others. A manager who cant solve a problem blames subordinates. This practice erodes an organizations culture.

Ego-defensiveness is a cognitive bias that leads managers to interpret events in such a way that their actions appear in the most favorable light.

Escalation of commitment is a cognitive bias that leads managers to remain committed to a losing course of action and to refuse to admit they have made a mistake, perhaps because of ego-defensiveness or because they are gripped by the illusion of control. Managers may remain committed to an incorrect action due to ego-defensiveness or the illusion of control. This bias is reinforced by incrementalist decision-making, which is destructive, and managers may be faced with rapidly changing competition or technology.

The net effect of all of the cognitive biases is that managers lose their ability to see new problems or situations clearly and to devise new responses to new challengesand the level of learning falls. The flawed decision-making that results from these biases hampers an organizations ability to adapt and modify its environment.

Questions

1. Explain the concept of Organizational decision making in your own words:

2. Do you believe leaders make decisions based on rationality and logic? Do you think they are constrained by bounded rationality?

3. How do you explain bounded rationality?

Think of Organizational Learning and Cognitive Structures and the ramifications of this process; for instance, think of the current circumstances in America: Your textbook, and research suggest cognitive structures shape managers interpretation of the information at hand.

4. Do you think decision-makers might have succumbed to these types of cognitive biases?

5. Do you think their interpretation of the current situation might have become distorted or wrong because of the operation of cognitive biases?

6. Do you think this view is changing? Why do you think so many Americans still have trouble admitting the pandemic is dangerous?

Also, think of what may happen when you make decisions while thinking of the consequences of your decisions.

7. Do you think this may shape the decisions you make?

8. Do you think your decision-making may be colored by any of the cognitive biases hereabove indicated? What do you do in order to avoid, or correct such distortions?