Rational Versus Irrational Decisions and Some of the Causes

Rational versus Irrational Decisions and Some of the Causes

Troy S Barnette

Florida Institute of Technology

MGT 5013 Organizational Behavior

April 10, 2011

Dr. Barbara Seifert

Introduction

Have you ever rushed to a rash decision without having all the facts? Have you made a decision based on memory only to later realize that your memory was not quite correct? Have you rushed to make a decision when a problem was getting worse right in front of you? Did you let your ego influence your decision making? These are some examples of issues that can cause us to make the wrong decision. At one time or another we have all done this. As managers or potential managers we must make sure that we do not fall into this trap.

One of the causes that help us to make rational or irrational decisions can be attributed to our individual bias. One of the first things the textbook, Psychological Dimensions of Organizational Behavior (Staw, 2003) talks about is the availability heuristic or ease of recall bias.

“A person is said to employ the availability heuristic whenever he estimates frequency or probability by the ease with which instances or associations could be brought to mind. To assess availability it is not necessary to perform the actual operations of retrieval or construction. It suffices to assess the case with which these operations can be performed, much as the difficulty of a puzzle or mathematical problem can be assessed without considering specific solutions….

Availability is an ecologically valid clue for the judgment of frequency because, in general, frequent events are easier to recall or imagine that infrequent ones.” (Kahneman, Slovic, & Tversky, 1992, p. 164)

When faced with choosing information that is unknown to us or familiar to us, most of us will choose information that is familiar even if we are not sure of why. We may choose to use one company over another based on the fact that their name was more familiar to us and all the while...