Biases in decision making process of employees

Year 2014, Volume: 1 Issue: 1, 39 - 53, 01.03.2014

M.Murat Yaslioglu Duygu Toplu Omer Sap

Abstract

Main purpose of this study is to examine the effects of possible “biases” on employees. Decisions are never simple to make and they sometimes go wrong because of human shortcomings. Errors in decision making can arise from the cognitive biases we all have as human beings and these biases reduce the efficiency of our decisions. These biases, which distort the way people collect and process information, can also arise from interactions in organizational settings, where judgment may be colored by self-interest that leads employees to perpetrate more or less conscious deceptions. Accordingly, people can easily walk away from rationality when they have to make a decision in an organization, thus this study reveals what type of distortions and deceptions that employees may face with in a decision making process

References

• Arkes, H.R. (1991). Costs and Benefits of Judgment Errors: Implications for Debiasing, Psychological Bulletin, 110, pp.486–498.
• Baransel, A. (1979). Çağdaş Yönetim Düşüncesinin Evrimi, Cilt 1, İstanbul Üniversitesi Yayınları No: 2684, Fatih Yayınevi, İstanbul.
• Beach, L.R. (1990), Image Theory: Decision Making in Personal and Organizational Contexts, Chichester UK: Wiley, pp.118-221.
• Baldwin, D. A. “Power and Social Exchange”, The American Political Science Review, 72(4) Aralık, (1974).
• Blau, P. M. (1964), Exchange and power in social life, NewYork, p.p. 88-90.
• Blau, P.M. (1970), A Formal Theory of Differentiation in Organizations, American Sociological Review, 35(2), p.p.201-218.7
• Bloomfıeld, A.N. (2006), Group Size and The Framing Effect: Threats to Human Beings and Animals, Memory & Cognition; 34(4), p.p. 929-937.
• Bradley, G.W. (1978), Self-serving Biases in The Attribution Process: A Re-examination of The Fact or Fiction
• Question, Journal of Personality and Social Psychology, 36, p.p.56-71. Bunderson, J.S., Sutclıffe, K.M. (1995), Work History and Selective Perception: Fine-tuning What We Know,
• Academy of Management Best Papers Proceedings, p.p.458-464. Burke, R. J. (1972), Why Performance Appraisal Systems Fail, Personnel Administration, p.p.32-40.
• Credit Union Directors Newsletter (2005), Explore Biases to Improve Strategic Decision Making, Credit Union
• National Association Inc., September. Campbell, W. K., Sedikides, C. (1999), Self-threat magnifies the self-serving bias: A meta-analytic integration,
• Review of General Psychology, 3, p.p. 23-43. Daft, R.L., Weick, K.E. (1984), Toward A Model of Organizations As Interpretation Systems, Academy of
• Management Review, 9, p.p. 284-295. Ekeh, P.P. (1974), Social Exchange Theory – The Two Traditions, London, p.p. 166-187.
• Freud, S. (1996), Inhibitions, Symptoms and Anxiety, The Standard Edition of the Complete Psychological Works of Sigmund Freud, London Hogarth Press,
• Gummerman, K. “Selective Perception and the Number of Alternatives”, The American Journal of Psychology, 84(2), (1971), p.p.173-179.
• Hertwig, R., Hoffrage, U., Fanselow, C. (2003), Hindsight Bias: How Knowledge and Heuristics Affect our
• Reconstruction of Past, Memory, 11(4/5), p.p.357-377. Hölzl, E., Kircher, E. (2005), Causal Attribution and Hindsight Bias for Economic Developments, Journal of Applied Psychology, 90(1), p.p. 167-174.
• Janay, A. K. (1998), Overconfidence: A Concept Analysis, Nursing Forum; 33(2) Academic Research Library, p.p.18-27
• Jensen, M., Meckling, W. H. (2001), “Theory of the firm: Managerial Behaviour, Agency costs, and Ownership
• Structure, Michael C. Jensen, A Theory of the Firm: Governance, Residual Claims, and Organizational Forms”, Cambridge, MA: Harvard University Press. Kahneman, D., Tversky, (1979), A. Prospect Theory: An Analysis of Decision Under Risk, Econometrica, 47(2), pp. 263–92,
• Kahneman, D. (1991), Judgement and Decision Making, Psychological Science, 2(3), p.p. 142-144.
• Kahneman, D., Knetsch, J., Thaler, R. (1998), Experimental Tests of the Endowment Effect and the Cease
• Theorem, Journal of Political Economy, 98, pp.1325–1348
• Katz, E., Blau, P. M., Brown, M. L., Strodbeck, S. L. (1957), Leadership Stability and Social Change: An Experiment with Small Groups, Sociometry, 20(1), p.p. 36-50.
• Koçel, T. 1998, İşletme Yöneticiliği: Yönetim ve Organizasyon, Beta Basım Yayın Dağıtım, Istanbul, p.p. 55-56.
• Lawrence, D. H., Coles, G. R. (1954), Accuracy of Recognition with Alternatives before and After the Stimulus,
• Journal of Experimental Psychology, 47, p.p. 208-214. Lowell, B. (2003), Strategic Minds at Work, McKinsey Quarterly, 2, pp.4-6
• Lichtenstein, S., Fischohoff, B. (1977), Do Those who Know More Also Know More About How Much They Know?,
• Organizational Behaviour and Human Performance, p.p.159-183. Miller, D.T., Ross, M. (1975), Self-serving Biases in The Attribution of Causality: Fact or fiction? Psychological Bulletin, 82, p.p.213-225.
• Nathan, N., Kahneman, D. (2005), The Boundaries of Loss Aversion, Journal of Marketing Research, 42, pp.119–
• Rabin, M. (1998), Psychology and Economics, Journal of Economics Literature, 36, pp.11- 46.
• Rabin, M., Thaler, R. H. (2001), Anomalies: Risk Aversion, Journal of Economic Perspectives, 15(1), p.p.219-232.
• Roxburgh, C. (2003), Hidden Flaws in Strategy, The McKinsey Quarterly, 2, pp.26–39.
• Russell, F. K. (2003), Biases in Decision Making and Implications for Human Resource Development, Advances in
• Developing Human Resources, 4(5), p. 440. Russo, J., Edward, P. J. H. Schoemaker, (1992), Managing Overconfidence, Sloan Management Review; 33(2), p.p. 7
• Simon, H. (1991), Organizations and Markets, Journal of Economic Perspectives, 5(2), p. 28.
• Smith, M., Levin, I. P. (1996), Need For Cognition and Choice Framing Effects, Journal of Behavioural Decision Making, 9, p.p. 283–290.
• Steven, K. J., Deborah, F., Tricia, J. Y., Eric K. (1998), Choices and Opportunities: Another Effect of Framing on
• Decisions, Journal of Behavioral Decision Making, 2, p.p. 211-226. Thompson, E. (2006), Take a Good Long Look at Bad Decisions”, Credit Union Executive Newsletter, January 9.
• Tosun, K. (1992), İşletme Yönetimi Birinci Cilt, p. 23, Savaş Kitap ve Yayınevi: Ankara, Kasım.
• Tversky, A., Kahneman, D. (1987), The Framing of Decisions and Psychology of Choice, Science, 211 (4481), p. 453-4
• Walsh, J.P. (1988), Selectivity and Selective Perception: An Investigation of Managers' Belief Structures and Information Processing, Academy of Management Journal, 31, p.p. 873- 896.