Looking Beneath the Surface: The Impact of Psychology on Corporate Decision Making

Abstract

This article discusses some of the most common ways in which business decisions are affected by cognitive biases. It focuses on the individual level of decision making and discusses how biases are deeply entrenched in the way many decisions are made. It also discusses how flaws in decision making can escalate when executives are under pressure, over-confident or part of a group. The article argues that we need to develop a better understanding of the effect of cognitive biases on executive decision making. Whilst research suggests that many aspects of our decision making processes operate outside of our conscious awareness, it is suggested that these flaws may be easier to monitor and control when we are aware of their potential impact on corporate decisions.