When making decisions, humans have two mental processing systems that they rely on. System 1, being the automatic one that is based on mental biases and heuristics and system 2, which is the slower, more though out approach to making decisions. Yet, with both of these systems available, we still make bad decisions even when we know better. Even when we know these decisions may not be to the best of our interest, we use mental shortcuts to defend our thought processes. The underlying factors that determine our decision-making are known as bounds; bounded rationality, bounded willpower and bounded motivation (Hayes, 2016). These three bounds result in us making suboptimal decisions even when we know that better decisions could be made. Bounded rationality explains that our decisions are limited due to the mental models we use to process information. Our minds do not have the ability to process unlimited information, after awhile we base our decisions off of the information that we have already processed leading to biases. Bounded willpower, as described by Jolls et. al (1998) is our inability to stop ourselves even when we know it is not in our best interest in the long run. Bounded motivation deals with our interests, personalities and likes and how our preferences cause us to resist change (Hayes, 2016).
When given feedback, and faced with the possibility of change, we feel threatened. Change pushes us out of our comfort zones, and means the acquisition of new information and knowledge, changing the procedures we have become so accustomed to. Instead of changing our routines completely, we do “just enough” to get us by without actually making a drastic change. This unease towards change is why even those who are knowledgeable and “know better” still make poor decisions. Poor decision-making occurs at both the individual level and the group level, the group level often leading to drastic organizational errors. An example of an organization that suffered as a...