Bias in Judgment

Managerial Decision Making Understanding bias is crucial to good decision-making because of the problems that are inherent in emotional human beings making intellectual decisions. That is not to suggest that people cannot engage in logical and rational decision making, but simply to recognize that there are frequently problems in the logical decision-making process. "Several of these problems occur because the human mind is easily influenced by internal and external factors. Biases and perceptions can lead to a misconstrued view of reality and the way we process information (Rebugio, 2013).

Furthermore, there are several different forms of bias: confirmation bias, anchoring, overconfidence bias, gambler's fallacy, and fundamental attribution errors (Pavey, 2014). As a result, when decisions are made in group settings, there may actually be several different types of bias impacting, and these various biases may actually make it more difficult for individuals to recognize that their teammates are engaging in biased decision-making and how those different biases may interact. It is important to understand other people's biases because they can help explain decision-making processes.

"Psychological bias -- also known as cognitive bias -- is the tendency to make decisions or take action in an illogical way" (Pavey, 2014). Being aware of bias immediately makes a person aware of the potential that others are acting in an illogical way. This is self-evident when a co-worker is openly acting in an illogical manner, but may be much more subtle when a team member is in charge of making conclusions based upon evidence and information that is not shared by the entire team.

These different conclusions may be biased, and it may be difficult, though not impossible, to recognize that bias if unfamiliar with the source material. In fact, relying upon information relayed by trusted people could actually be a means of introducing bias into decision-making, because of the positive connotations associated with those people and the desire to trust their judgment about decisions without questioning that judgment. It is impossible to know all of a person's biases, large and small.

In fact, most individuals are not even aware of their own biases, assuming, instead, that their perceptions are unbiased. That may be the most difficult cognitive illusion of all; overcoming the notion that personal perceptions are objective. By realizing that personal perceptions are all subjective and that every person, no matter how logical that person may be, is impacted by bias. Therefore, examining when people are biased and taking steps to correct for that bias is an important characteristic of managerial decision-making.

Furthermore, it can be important to understand that bias is not always negative. For example, a parent who has lost a child in an accident may not be objective about the risks inherent in a new product, but may be a perfect person to have working on product safety issues. Therefore, it is important to realize that bias is not always a negative thing.

Instead, bias that is not recognized and accounted for is what it negative, because it masquerades as being objective, rational, and logical, when, in some way, it is driven by emotions. Improving decision-making in a group setting.