Organizational Behavior (Chapter 6: Perception and Individual Decision Making)
Case Incident 1: Decision-Making Processes at Steel Inc.
1) Which biases in decision making can be identified in the performances of both Pieterson and Gack?
In general, the decision making style for manager approach decision making is toward rational and intuitive thinking. In rational thinking a person consider the problem in a rational, step-by-step and analytical way. Rational thinking person will resolve a complex and complicated problem into smaller part and then resolve them in a rational, logical and integrated method. Another way of decision making style which is intuitive thinking is more flexible, spontaneous and creative. Intuitive thinking person will respond to a problem quickly and gone through evaluation and come out with several possible alternative solution. Intuitive thinking person is expected to deal with many problems at once, review quickly from one to another and respond based on experience of his own and spontaneous ideas.
In this case, John Pieterson behaves anchoring and adjustment heuristic and rational in his decision making for the Steel Incorporated branch in the Netherlands while Jack Gack is an intuitive thinking manager and he has the escalating commitment. Anchoring bias is a tendency to fixate on initial information and fail to adequately adjust for subsequent information. It occurs because our mind appears to give a disproportionate amount of emphasis to the first information it receives. Escalation of commitment is refers to staying with a decision even where there is clear evidence its wrong. Both managers have their own way in handle their problem and making decision for their problem but they having biases in their making decision.
John Pieterson has the biases “anchoring and adjustment heuristic” because he making decision based on adjustments to a previously starting point or existing value. In this case study, the evidence that...