Judgment in Managerial Decision Making, 8th Edition

CHAPTER ONE

Introduction to Managerial Decision Making

The human mind packs spectacular power into its modest three-pound mass. With little effort, we can accomplish sophisticated tasks, such as recognizing faces or catching balls, that remain beyond the abilities of even the most powerful computers and sophisticated robots.

Yet most people remain largely unaware of how their minds accomplish complex tasks, and introspection and experience offer poor guidance. The fact that we lack an “operating manual” for our minds might not seem important. In fact, however, our lack of knowledge about how our minds work has profound consequences. Without an understanding of our thoughts and behavior, we cannot anticipate when the cognitive processes that usually serve us so well are likely to lead us astray.

Fortunately, psychological research has uncovered many of the clever and sophisticated shortcuts on which our brains rely to help get us through the day—as well as common errors that these shortcuts lead us to make on a regular basis. These errors can lead to relatively minor problems, such as buying the wrong product, hiring the wrong employee, or selecting the wrong investment. They also can contribute to big problems, such as bankruptcy, government inefficiency, and social injustice.

Even the brightest of people are susceptible to many of these errors. In fact, intelligent people who receive high scores on college entrance exams are just as vulnerable to many of these errors as are people ...