What we’ve learned from behavioural studies and behavioural
economics is that decision making is not always a rational process – shocking,
I know. While that might sound ridiculously obvious, the extent to which
decision making is swindled by external and
internal influences remains underestimated, and it continues to mislead people
in their daily decision making.
We all have two inherent decision making processes that are constantly at ends
with each other. Kahneman[1]
explains that the first part is an automatic response associated with fast
decision making: good for survival, but it also prompts immediate gratification
which is usually irrational and short-sighted. The second part is a slower,
more logical, form of decision making that is more rational. The decision making
techniques applied to the present (“today”) competes with the more calculating
part of the brain that is dominant during longer term decision making processes[2].
This contradiction causes a time inconsistency in decision making. In short, it
explains the reason for all those failed good intentions we know so well: “I will only stay for one drink”. Immediate gratification
is a real threat to rational decision making.

Pic credit: www.demilked.com
Another little obstacle we face is that we like to believe that
we are quite objective and good intuitive statisticians. The fact that this
isn’t true is a bitter pills to swallow. We unconsciously apply biases and
heuristics to situations that taint our decision making.
The point I’m trying
to make? The contexts in which
individuals can make decisions becomes important when you want to understand
the complexity of behaviour in organisations[3].
We need to be aware of the flaws in our own thought processing so that we can
improve our own decision making and that of the groups and organisations we
function in.
Have a look at this sample of common heuristics and biases
that we fall victim to[4]:
· Anchoring
and adjustment : Choice is anchored
and adjusted from known values
We use initial information as an anchor for
opinions. We then adjust subsequent
opinions according to additional information received, however, subsequent
opinions always land closer to the anchor than it would have had there been no
anchor. Ouch!
· Availability:
Judgement about the frequency of an event
is based on how easily one can recall similar instances
Basically our brains convince us that “if
you can think of it, it must be important[5]”. The ease with which we can recall
information forms our opinion on the importance thereof. Ease of recollection is
increased by the frequency of information or the salience of the event... if
the Kardashians are on every magazine, surely they should be important right?
· Conformity:
Choice is driven by a desire to conform
to norms
We generally align our actions to conform
to the perceived code of conduct of the environment we find ourselves in.
Behavioural
decision theories are extremely powerful when applied in an intentional manner
in our own lives, in creating a group culture, or to team decision making.
Creating organisational cultural norms can encourage individuals to make value
adding decision that are in line with organisational objectives and values.
Author
Estée Roodt (MCom Industrial Psychology)
Estée is part of our Behavioural Specialist team here at Workpoints. She is our keen researcher, our problem-solver and our number one sports star.
Estée is part of our Behavioural Specialist team here at Workpoints. She is our keen researcher, our problem-solver and our number one sports star.
Workpoints is a fully featured reward, recognition and incentives platform that provides you with the tools to create a high performance organisation. Our easy-to-use application integrates simply into any organisation and instantly encourages staff to do the daily grind with excellence and energy.
Visit www.workpoints.co.za for more info and a free trial!
Visit www.workpoints.co.za for more info and a free trial!
References
Duflo, E. & Banerjee, A. (2012). Poor Economics. United Kingdom: Penguin Books Ltd.
Kahneman,
Daniel, 1934-. (2011). Thinking, fast and slow. New York: Farrar, Straus and
Giroux.
Malina,
M. A., & Selto, F. H. (2015). Behavioral-economic nudges and performance
measurement models. Journal of Management Accounting Research, 27(1),
27–45. http://doi.org/10.2308/jmar-50821
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